U.S. Federal Reserve may raise the interest rate to around 6 percent according to global research from the Bank of America, due to consumer demand and tight labor market might force the central bank to fight the inflation for a longer time.
Traders are currently pricing in a number which is higher than a peak of 5.4 percent by September.
BofA has also noted on the 27th of February that “aggregate demand needs to weaken significantly for inflation to return to the Fed’s target.
Further supply-chain normalisation and a slowdown in the labour market will help, but only to a degree,”
According to the statement of the BofA the processes are taking longer than expected by both the bank and the market.
The bank’s stance is a result of the recently added expectation for quarter basis point increase in June, following the same moves in both March and May. The expectations have a peak rate of 5.25 percent to 5.5 percent.
