Top brokerages expect the U.S. Federal Reserve to raise interest rates at least once more this year after policymakers signaled further tightening following their latest rate hike.
The Fed raised its benchmark interest rate to a 3.75 per cent-4.00 per cent range on Wednesday, marking its first hike in three years and the first policy move under the central bank’s new chief, Kevin Warsh, who took office in late May after being selected by U.S. President Donald Trump with expectations of rate cuts.
While most major brokerages expect the Fed to deliver one more rate hike this year, likely in December, Goldman Sachs and BofA Global Research see the next increase coming as early as October.
BofA stands out as the only major brokerage forecasting a total of 50 basis points of additional tightening by year-end.
Rate futures markets now reflect about a 90 per cent probability of a follow-up quarter-percentage-point rate hike by the end of this year, according to CME Group’s FedWatch Tool.
Here are the forecasts from major brokerages for 2026:
| Brokerage | Total hikes in 2026 | No. of hikes in 2026 | Fed funds rate |
|---|---|---|---|
| BofA Global Research | 50 bps of hikes | 2 (October and December) | 4.25%-4.50% |
| Goldman Sachs | 25 bp rate hike | 1 (October) | 4.00%-4.25% |
| J.P.Morgan | 25 bp rate hike | 1 (December) | 4.00%-4.25% |
| Nomura | 25 bp rate hike | 1 (December) | 4.00%-4.25% |
| HSBC | 25 bp rate hike | 1 (December) | 4.00%-4.25% |
| Barclays | 25 bp rate hike | 1 (December) | 4.00%-4.25% |
| Deutsche Bank | 25 bp rate hike | 1 (December) | 4.00%-4.25% |
| UBS Global Wealth Management | 25 bp rate hike | 1 | 4.00%-4.25% |
| UBS Global Research | 25 bp rate hike | 1 (December) | 4.00%-4.25% |
| Morgan Stanley | 25 bp rate hike | 1 (December) | 4.00%-4.25% |
| Macquarie | 25 bp rate hike | 1 (December) | 4.00%-4.25% |
| BNP Paribas | 25 bp rate hike | 1 (December) | 4.00%-4.25% |
| Citigroup | No policy change | _ | 3.75%-4.00% |
(Compiled by the Broker Research team in Bengaluru; Editing by Shinjini Ganguli, Eileen Soreng, Joyjeet Das, Harikrishnan Nair, Pooja Desai and Devika Syamnath)
