BofA raises global growth outlook, sees 75 bps Fed hikes despite easing inflation
Bank of America raised its global growth forecasts and expects the Fed to resume 75 bps rate hikes later this year despite easing inflation, citing a fragile Iran peace deal that eased energy concerns.
Bank of America has raised its global growth forecasts, now projecting 3.2% GDP growth in 2026, accelerating to 3.5% in 2027 and easing to 3.3% in 2028. The revision follows a fragile Iran peace agreement that has eased energy market concerns, lowering the bank's inflation outlook. BofA now sees global inflation at 3.0% this year, 2.4% in 2027, and 2.5% in 2028, with Brent crude expected to average $72 per barrel in the second half of 2026 and $65 in 2027, assuming no renewed escalation in the Middle East.
For energy traders, the Iran deal's impact on oil supply expectations is a key driver. A reduction in geopolitical risk premium could weigh on crude prices, while the Fed's anticipated 75 basis point rate hikes later this year may strengthen the US dollar, further pressuring commodities priced in dollars. Lower inflation forecasts also suggest reduced demand for oil as a hedge, but the growth upgrade points to stronger long-term demand. Traders can track real-time price movements on NowPrice's live fuel dashboard to monitor these dynamics.
Looking ahead, markets will focus on upcoming US inflation data and Fed meeting minutes for confirmation of the rate path. Any signs of renewed Middle East tensions could reverse the current easing in oil prices. BofA's forecasts assume the Iran agreement holds, making geopolitical developments a critical watchpoint for energy markets in the coming months.