© Reuters. FILE PHOTO: The U.S. Federal Reserve Board building on Constitution Avenue is pictured in Washington, U.S., March 19, 2019. REUTERS/Leah Millis//File Photo
(Reuters) – Major investment banks have penciled in a strong run of interest rate hikes for 2022 after hotter-than-expected inflation data ramped up pressure on the Federal Reserve to take a firmer stand against soaring prices.
Data last week showed U.S. consumer prices rose at their fastest pace since the early 1980s, fuelling market speculation for a hefty 50-basis-point hike from the Fed’s March 15-16 meeting.
The current Fed fund effective target is 0-0.25%.
As the Fed gets set to raise pandemic-era rates, here are the estimates from major global investment banks on how far and fast rates will rise:
* JP Morgan raises its Fed call to seven 25-bp rate hikes from five previously, for a total of 175 bps of tightening this year.
* Morgan Stanley (NYSE:) now expects the Fed to deliver six 25-bp hikes this year. It had previously forecast 125 bps of tightening via four 25-bp hikes plus a 25-bp fed funds equivalent runoff of the Fed’s balance sheet.
* UBS now expects 150 bps of tightening this year via six consecutive quarter-point moves from March through November. It had previously forecast 25-bp increases in March and June, then “a potential shift toward an every meeting hike pace”.
* BNP Paribas (OTC:) expects six hikes of 25 bps this year starting in March, resulting in a cumulative 150 bps of tightening.
* Citi now expects 150 bps of tightening this year, starting with a 50-bp move in March, followed by four, quarter-point increases in May, June, September and December.
* Credit Suisse (SIX:) now expects the Fed to hike a cumulative 175 bps this year, beginning with a 50-bp increase at the upcoming March meeting.
* Societe Generale (OTC:) now expects five rate hikes of 25 bps this year, starting in March.
* Goldman Sachs (NYSE:) said it is raising its forecast to include seven consecutive 25-bp rate hikes at each of the remaining Federal Open Market Committee (FOMC) meetings in 2022 from a previous expectation of five hikes.
* BofA Global Research expects the Fed to hike rates by 25 bps at each of this year’s remaining seven meetings, unchanged from its previous outlook. However, it said there is a risk of a 50-bp hike in the March meeting.
* HSBC expects the Fed to roll out a 50-bp hike in March and four more quarter-point rate rises in 2022.
* Deutsche Bank (DE:) expects the Fed to call a 50-bp hike in March plus five more 25-bp hikes in 2022, with a hike at all but the November meeting.
* Barclays (LON:) now expects the Fed to raise rates by 25 bps five times this year, up from three hikes forecast earlier.
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