BofA's Brian Moynihan Expects Fed To Hike Rates Three Times In 2026, Sees Inflation In 'Mid-2s' By End Of 2027

• Moynihan does not expect a hike in interest rates to have an impact on the short-term financing being used by companies for the artificial intelligence infrastructure buildout.
• He added that the returns on the data center buildout are high enough to allow companies to absorb the higher rates across long-term bonds as well.
• Federal Reserve Bank of Minneapolis President Neel Kashkari said that he believes interest rate hikes are needed now to tame inflation.

Bank of America CEO Brian Moynihan expects the Federal Reserve to hike interest rates three times this year through September, November, and December.

“If it goes better than… like last month, it went down better than people thought… then I’m sure they would change that [expectation]. But right now, they think that three [hikes] gets the Fed in a place that they can have the inflation tamed,” he said during an interview with CNBC.

Moynihan Expects Inflation In ‘Mid-2s’ By End Of 2027

Moynihan added that he expects inflation to be in the “mid-2s” by the end of 2027 and then get into the Fed’s long-term target range of 2% subsequently.

“If you look at the issues of inflation rolling through the economy, it was mitigating and then popped back up because of the impact on prices from tariffs, impact on prices from the war, and that’s coming back down,” he said.

Data released last week by the Commerce Department showed that the Personal Consumption Expenditures (PCE) Index, which is the Federal Reserve’s preferred gauge of inflation, advanced 3.7% in June on an annualized basis.

Core PCE, which excludes food and energy, rose 3.3% on an annualized basis in June, up 0.1% on a monthly basis.

Moynihan does not expect a hike in interest rates to have an impact on the short-term financing being used by companies for the artificial intelligence infrastructure buildout.

He added that the returns on the data center buildout are high enough to allow companies to absorb the higher rates across long-term bonds as well.

Kashkari Believes Rates Hikes Needed Now To Tame Inflation

Meanwhile, Federal Reserve Bank of Minneapolis President Neel Kashkari echoed a similar sentiment, saying that he believes interest rate hikes are needed now to tame inflation.

In another CNBC interview, Kashkari said that rate hikes should begin gradually, starting in September as the Fed gets more data to work with.

“Corporate earnings are through the roof. They’re doing great. The consumer is hanging in there. The labor market is hanging in there. I look at this constellation and I say, what evidence do I have that monetary policy is particularly restrictive right now?” he said.

Kashkari added that while he is not calling for a dramatic hike in rates, he thinks the Fed has more work to do to bring inflation back down toward its long-term target.

“I would rather get going now in small steps than wait till later, then we have a really entrenched inflation problem and have to raise rates aggressively,” he added.

Kashkari was one of the three dissenters at the Federal Open Market Committee (FOMC) meeting last week, alongside Federal Reserve Bank of Cleveland President Beth Hammack and Federal Reserve Bank of Dallas President Lorie Logan. The three dissenters preferred to raise the target rate by 25 basis points.

Data from the CME FedWatch tool shows 56.9% odds of a 25 basis point rate hike for the first time in September, 53.2% in October, and 43.7% in December this year.

At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was up 0.02%; the Invesco QQQ Trust ETF (QQQ) fell 0.37%; and the SPDR Dow Jones Industrial Average ETF Trust (DIA) gained 0.8%. Retail sentiment on Stocktwits regarding the S&P 500 ETF was in the ‘neutral’ territory.

The iShares 20+ Year Treasury Bond ETF (TLT) was up 0.13% at the time of writing, while the iShares 7-10 Year Treasury Bond ETF (IEF) was down 0.03%.

Also See: Lisa Su Says Customers Want 'A Lot More Compute' — Sees 'Tremendous Momentum' In AMD’s Data Center Business

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