Wall Street, Fed officials push for third 0.75% interest rate hike

Several Wall Street banks raised expectations this week for the Federal Reserve’s next rate hike. Economists at Bank of America, Goldman Sachs, and Nomura now anticipate a 75 basis-point rate increase at their next FOMC meeting, this is up from previous forecasts of a half percentage-point hike.

Following remarks by Fed Chair Jerome Powell at the Cato Institute’s 40th Annual Monetary Conference on Thursday, markets were pricing in about 71 basis points worth of rate hikes in September, based on federal funds futures, or above a 90% chance of a 75 basis point rate hike, Bank of America noted.

The case for a 75 basis point rate hike began cascading through Wall Street on Wednesday, after a report from the Wall Street Journal suggested the Fed would likely raise rates by this amount at its next policy meeting.

In addition to comments from Fed Chair Powell this week, Fed officials ranging from Vice Chair Lael Brainard to Fed Governor Christopher Waller and St. Louis Fed President James Bullard suggested the central bank will likely keep up its recent pace of interest rate increases.