US Fed to Raise Rates Twice More in 2026, Says Bank of America - Morningstar

Bank of America expects the US Federal Reserve to raise interest rates twice more in 2026, according to reporting by Morningstar. The forecast implies that the central bank's easing cycle may not extend as far as some market participants had assumed, and that policymakers could return to tightening if economic conditions warrant.

For markets, the projection matters because rate expectations feed directly into borrowing costs, currency valuations and equity valuations. Higher-than-expected policy rates typically support the dollar and can pressure rate-sensitive sectors such as real estate and long-duration growth stocks, while benefiting lenders through wider margins. Bond yields would likely respond to any shift in the expected path.

It is worth noting that this is a single bank's forecast, not Fed guidance. Investors should watch incoming inflation and labor-market data, Fed officials' public comments and the central bank's own projections for signals on whether two additional hikes in 2026 become the base case. Divergence between market pricing and analyst forecasts can itself create volatility.