Key points
- Bank of America on 13 November forecast quarter-point Fed rises in December 2026, January 2027 and March 2027, to a peak range of 4.5% to 4.75%.
- The bank cited October data, Fed officials' comments and markets pricing more than 45 basis points of rises by January, according to TheStreet Pro.
- TheStreet Pro reported all 10 Fed officials who have spoken since 5 November lean toward more rises; the Fed meets on 8 and 9 December.
- Bank of America does not expect a half-point December rise; TheStreet Pro put futures odds of one at about 14% after the CPI report.
- Most details rest on one report summarising the bank's note; Treasury yield levels and several data releases could not be verified.
Bank of America economists said on Friday 13 November 2026 that they expect the Federal Reserve to raise interest rates by a quarter point at each of its next three meetings: December 2026, then January and March 2027. The forecast was reported by TheStreet Pro. It would lift the federal funds target range, the band the Fed uses to steer overnight lending between banks, from 3.75% to 4% today to a peak of 4.5% to 4.75%.
The Fed is already in a tightening cycle. The question now is speed. Bank of America said the Fed "no longer has the luxury of hiking at a quarterly pace", according to TheStreet Pro.
A note on sourcing: almost every detail in this explainer comes from a single report, TheStreet Pro's 13 November live market page. That page summarises Bank of America's research note, which we have not reviewed directly. We could not retrieve readable text from other outlets, official data releases or market-data pages, so figures that appeared in earlier versions of this story have been removed.
What Bank of America changed
The bank's previous forecast had rate rises in December and March. With December now looking like "a done deal", Bank of America economist Aditya Bhave said the choice was between pulling the March rise forward to January or adding another one. The bank added one.
That puts Bank of America one rise ahead of Goldman Sachs. TheStreet Pro said Goldman added a March rise to its own forecast two days earlier, on 11 November. Bank of America's path matches Deutsche Bank's, according to TheStreet Pro. Unlike Goldman, Bank of America has no rate cuts pencilled in for 2027 or 2028.
Why the bank thinks the Fed must move faster
Bank of America pointed to three things: the October economic data, this week's comments from Fed officials and a large shift in market pricing. Together, it said, they "suggest that the entire distribution of outcomes has now moved to the right". In plain terms, the bank thinks every plausible outcome for rates is now higher than before.
The bank said markets were already pricing more than 45 basis points (0.45 percentage points) of rises by the January meeting. That is close to two quarter-point moves.
One labour market figure is confirmed in the report: wages rose 0.4% in October, according to TheStreet Pro. We could not verify the October consumer price, producer price, payroll or unemployment figures from the materials available for this article.
What Fed officials have said this week
TheStreet Pro reported that all 10 Fed officials who have spoken on the direction of rates since Thursday 5 November lean toward further rises. The individual comments it cited:
- Governor Christopher Waller said on Tuesday 10 November that the Fed needs to take back at least the 75 basis points of "risk management" cuts it made last year. Bank of America sees that as the consensus on the committee and expects the Fed to reverse one of its 2024 cuts as well.
- Cleveland Fed President Beth Hammack has said she favours going "steadily in smaller increments".
- Dallas Fed President Lorie Logan said "it may be possible to move more rapidly this winter".
- San Francisco Fed President Mary Daly said "my bias is that further tightening will be needed", according to Reuters as relayed by TheStreet Pro. Daly and New York Fed President John Williams both want more rises but "over time", TheStreet Pro said.
The Fed itself has announced no decision. Its next meeting is on 8 and 9 December.
Why a half-point rise in December is not the base case
TheStreet Pro reported that futures markets put about a 14% chance on a half-point December rise after the October consumer price report. We have not checked that figure against futures exchange data.
Bank of America does not expect a half-point move, and gave five reasons:
- It would be a big jump from the current pace of rises every other meeting. With no more consumer price reports before December and two before January, back-to-back quarter points can do the job.
- Oil prices have fallen sharply.
- A half point would make the Fed's October pause "look very political".
- Fed doves can point to tame wage costs: unit labour costs (the wage cost of producing one unit of output) fell outright in the third quarter and are up 2.4% from a year earlier.
- A half point could cause market pricing to "become unanchored", given what the bank described as Fed Chair Kevin Warsh's unwillingness to guide markets.
The bank said "everything would have to break in favor of the hawks" for a half point. Its conditions were October core PCE inflation (the Fed's preferred price gauge, excluding food and energy) near 0.4%, a 4.0% unemployment rate in November, 0.4% wage growth in November, more officials open to the idea, and futures pricing at least a 50% chance. Bank of America currently tracks October core PCE at 0.32%.
What could push the path higher or lower
Bank of America calls the risks to its forecast balanced.
On the downside, it describes the possibility of "a reflexively dovish committee" that delays the final rise to April or June, or skips it. That could happen if inflation or jobs data soften (the Fed gets four more months of data before March), if a US-Iran deal brings a lasting drop in oil prices, or if stocks sell off sharply.
On the upside, the bank said a tighter labour market and a jump in wage growth could take the policy rate above 5%. Price increases that companies make at the start of 2027 also matter. Bank of America expects them to be somewhat smaller than this year's, because AI-related input costs are still rising but diesel is well off its highs.
Why this matters outside the US
This section is our analysis, not reported data. The Fed's policy rate sets the base cost of borrowing in dollars. Faster US tightening generally raises funding costs for governments and companies abroad that borrow in dollars, and can draw investment toward US assets. The oil link runs both ways: Bank of America lists a US-Iran deal that lowers oil prices as one reason the Fed could slow down.
What we could not verify
We are not reporting a level for the 10-year US Treasury yield this week. Earlier drafts cited closing figures from several outlets, but none of those reports or the official Fed data series could be retrieved in readable form, and the figures we had did not agree. The same applies to stock index moves, the dollar and other markets.
Dates to watch
- Wednesday 18 November: minutes of the Fed's October meeting.
- Wednesday 25 November: October core PCE inflation.
- Friday 4 December: November jobs report.
- 8 and 9 December: Fed policy meeting.
Why it matters
The Fed's policy rate sets the base cost of dollar borrowing for US households and companies and for foreign borrowers in dollars. A forecast of three consecutive rises from a major bank signals that Wall Street expects tighter US credit into 2027, with oil prices and US-Iran talks among the factors that could change that path.
What we know
- Bank of America expects quarter-point Fed rises in December, January and March, taking the range from 3.75% to 4% to 4.5% to 4.75%, according to TheStreet Pro.
- Goldman Sachs added a March rise to its forecast two days earlier; Bank of America's path matches Deutsche Bank's, per TheStreet Pro.
- Governor Christopher Waller said on 10 November the Fed needs to take back at least 75 basis points of last year's 'risk management' cuts, as reported by TheStreet Pro citing Bank of America.
- Wages rose 0.4% in October, according to TheStreet Pro.
- Bank of America tracks October core PCE at 0.32% and lists five conditions for a half-point December rise.
- The October FOMC minutes are due 18 November, core PCE on 25 November, the November jobs report on 4 December and the Fed meeting on 8 and 9 December.
What we don't know yet
- Where the 10-year Treasury yield closed this week; reports and official data could not be retrieved in readable form.
- The October consumer price, producer price, payroll and unemployment figures, which could not be verified from available sources.
- Whether futures odds of a half-point December rise match the roughly 14% reported by TheStreet Pro.
- The full text of Bank of America's research note, which we have seen only as summarised by TheStreet Pro.
- How the Fed will act at its 8 and 9 December meeting; it has announced no decision.
Market and economic impact
- Fed policy expectationsUpward pressure
- Bank of America now expects three straight quarter-point rises to a 4.5% to 4.75% peak, one more than Goldman Sachs.
- US short-term rate pricingUpward pressure
- Markets were pricing more than 45 basis points of Fed rises by January, according to Bank of America.
- US Treasury yieldsUnclear
- Direction and level this week could not be verified from available sources.
- Dollar borrowing costs abroadUpward pressure
- Faster US tightening generally raises costs for foreign borrowers in dollars (analysis, not reported data).
- Oil pricesUnclear
- Bank of America lists a US-Iran deal that cuts oil prices as a reason the Fed could slow or skip its final rise.
