BofA Says Potential July Rate Hike Would Be Unprecedented
Bank of America (BAC) suggests that if the Federal Reserve raises interest rates on Wednesday, it would be an unprecedented move not aligned with market expectations. The Fed has kept its benchmark rate unchanged since December at a range of 3.5% to 3.75%, despite inflation remaining above target. Crude oil price volatility in July complicated efforts by Chair Kevin Warsh to maintain price stability. Historically, the Fed has never raised rates with less than 60% probability priced into markets beforehand; currently, traders are pricing only about 10 basis points of tightening—roughly 38% odds—for a hike. A move would signal that the central bank is acting independently from market signals and could reshape perceptions around its credibility. BofA's base case remains for no change at this meeting but acknowledges dissenting voices within the FOMC, including Dallas Fed President Lorie Logan and Cleveland Fed President Beth Hammack.
Tickers: $BAC
Topics: Federal Reserve FOMC meeting inflation interest rates