TL;DR

  • BofA CEO Brian Moynihan expects Fed rate hikes in September, November, and December 2026
  • PCE inflation came in at 3.7 percent annualized in June — well above the Fed's 2 percent target
  • Moynihan does not expect higher rates to halt AI infrastructure investment
  • Inflation is not expected to reach the "mid-2 percent level" until the end of 2027

Moynihan takes a stand where Fed officials stay vague

In an industry where central bankers rarely commit to specific numbers, Bank of America CEO Brian Moynihan stands out. In an interview with CNBC, he laid out a precise forecast: three Federal Reserve rate hikes before year-end — in September, November, and December, according to ForexLive/InvestingLive.

It is unusual for a sitting major bank CEO to put such a specific number on rate expectations. Moynihan grounds his forecast in the view that monetary policy has yet to bring inflation under control, and that three hikes would put the Fed in a position to tame price growth.

"Right now, they think that three hikes gets the Fed in a place that they can have the inflation tamed" — Brian Moynihan, BofA CEO
BofA CEO: Fed needs three rate hikes in 2026 - Bilde 1

PCE well above target — but trends are turning, Moynihan says

Fresh PCE data from the U.S. Department of Commerce underpins the concerns. According to the source, the PCE index — the Fed's preferred inflation gauge — rose 3.7 percent annualized in June. Core inflation, which excludes food and energy, came in at 3.3 percent annualized, up 0.1 percentage points from the prior month.

3.7%
PCE inflation June (annualized)
3.3%
Core PCE June (annualized)

Moynihan points to tariffs and ongoing war as the two primary drivers behind the inflation resurgence, but stresses that both factors are now beginning to ease as sources of pressure. He expects inflation to fall to the "mid-2 percent level" by the end of 2027, before gradually moving toward the Fed's long-term 2 percent target.

There is, however, reason to treat these forecasts with some caution: the path of inflation has proven harder to predict than analysts have repeatedly assumed, and geopolitical variables can quickly change the picture.

BofA CEO: Fed needs three rate hikes in 2026 - Bilde 2

AI infrastructure: Resilient to higher rates

One of the most market-relevant elements of Moynihan's remarks concerns the AI sector. Contrary to fears that higher borrowing costs will dampen the massive wave of investment in data centers and AI infrastructure, he believes the returns from such investments are robust enough to absorb increased financing costs — both in the near and long term.

BofA sees no signs that rate hikes will put the brakes on the AI capital expenditure cycle

This is a signal the market should take note of: if institutional consensus holds that the logic behind AI investment remains intact in a high-rate environment, it could support sentiment around AI infrastructure and semiconductor stocks even as the Fed tightens.

Market implications: Pressure on the front end of the yield curve

Moynihan's comments come during a period of heightened risk aversion — the crypto Fear & Greed Index stands at 27 out of 100, and Bitcoin is trading around $64,600 at the time of publication. Historically, aggressive Fed tightening cycles have pressured risk-sensitive assets, and BofA Global Research's own analysis suggests that upcoming rate hikes could create "near-term headwinds" for risk assets.

For the bond market, Moynihan's view implies that short-term rates could be pushed even higher if other major institutions share his assessment. An inflation return to target stretching into 2028 or beyond is a scenario markets have not yet fully priced in.

The Fed has three remaining policy meetings in 2026: September, October, and December — although Moynihan himself uses November rather than October in his forecast, which is worth noting.

Source: ForexLive/InvestingLive, BofA CEO interview with CNBC, Commerce Department PCE data