Updates with Deutsche Bank's forecast

By Kanchana Chakravarty

June 22 (Reuters) - BofA Global Research and Deutsche Bank expect the U.S. Federal Reserve to raise interest rates in 2026 due to economic resilience and a more hawkish stance under new Chair Kevin Warsh, marking a departure from their prior forecasts of steady rates.

BofA said on Monday it expects the U.S. central bank to raise rates by 25 basis points each in September, October and December, making the most aggressive rate-hike bet among global brokerages.

Deutsche Bank, in a note dated June 19, forecast two 25 bps hikes this year - one in September and another in December.

The rate hike projections from both research firms run counter to global brokerages' 2026 forecasts, which anticipate steady rates this year.

Deutsche Bank and BofA's revised forecasts come after the Fed left its benchmark rate unchanged earlier this month, even as almost half of Fed policymakers indicated that they now expect rates to rise this year.

The policymakers' more hawkish outlook is accompanied by strength in the labor market and elevated inflation concerns.

"June Summary of Projections and Warsh's comments indicate that the Fed's reaction function is much more hawkish than we thought," analysts at BofA said in a note.

Deutsche Bank sees two-sided risks to its rate-hike view.

"On the hawkish side, there is the potential for the Committee to coalesce around a July rate hike. On the dovish side, the recent improvement in energy prices and inflation expectations may more sustainably reduce the urgency to act," Deutsche Bank added.

Markets are pricing in roughly 41.2 bps of hikes in 2026, according to LSEG data.

Brokerages including BNP Paribas and Macquarie are also among the minority that expect the central bank to start hiking rates this year.

Both BofA and Deutsche Bank analysts expect the central bank to keep interest rates on hold in 2027.

Deutsche Bank expects the Fed to begin easing borrowing costs in 2028, penciling in 25 bps of rate cuts each in March and June.