What global banks forecast for Federal Reserve rate hikes in 2022

[BENGALURU] 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 US 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 per cent.

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: * JPMorgan 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 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 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 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 now expects five rate hikes of 25 bps this year, starting in March.

Goldman Sachs 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 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 now expects the Fed to raise rates by 25 bps five times this year, up from three hikes forecast earlier. REUTERS