LONDON/NEW YORK – Bank of America (NYSE) (BofA), Citi joined a select group of high-ranking investment banks that is calling for more aggressive interest rates from the U.S. Federal Reserve. The backdrop of soaring inflation numbers and hawkish statements from policymakers has led to a growing list of top financial institutions calling for higher interest rates.

BoFA expects to see two increases of 50 basis points at Fed’s June/July meetings. There are “risks,” of these expectations being pushed forward into May/ June.

Citi expects 50 basis point increases in May and June, July, July, September. Also, 25 basis point tightening is expected in October and Dec.

Economists at the bank stated that they expect the Fed’s continued hikes to increase until the Fed reaches a range of 3-3.25% in May 23. This is 25bps more than the terminal rate that was previously predicted.

According to the money market, there is a 80% likelihood of a rate hike of 50bps in May. There will also be about 200 basis points cumulatively by 2022.

Goldman Sachs (NYSE 🙂 anticipates seven rate increases in 2022, and five in 2023.

Citi predicts that the Fed would continue raising rates into 2023 with a range between 3.5 and 3.75% as its policy rate target.

Citi reported in its recent note, “Recent Fed speech raised our convictions that Chair (Jerome Powell), and the wider committee will support an increase of 50 bp in May despite the reduction in balance sheet announced at this meeting.”

Citi noted that “it appears that 50-bp could have been delivered in March but for the acute uncertainty associated with geopolitical tensions.”