US economic growth and interest rate forecasts

Economists from major North American banks and Bank of America are projecting continued economic resilience and potential interest rate hikes in the United States through 2026 and 2027.

The American Bankers Association’s Economic Advisory Committee expects the U.S. economy to expand steadily, with real GDP growth projected at 2.2% for the fourth quarter of 2024 and 2.2% in 2027. This growth is expected to be driven by robust business fixed investment, particularly in data centers and technology equipment, alongside steady consumer spending. However, the committee anticipates inflation will remain above the Federal Reserve’s 2% target, with core PCE reaching 3.3% in late 2026.

Separately, Bank of America forecasts that the Federal Reserve will implement two additional interest rate hikes in 2026, diverging from market consensus which expects only one. Analysts suggest that Fed Chair Kevin Warsh may pursue these hikes to bolster his institutional legacy and demonstrate political independence despite pressure for rate cuts. This hawkish stance is supported by persistent inflation and a strong economy, with some analysts suggesting the current cycle may be closer to its beginning than its end.