Nomura Raises Fed Hike Forecasts on Higher Oil Prices and Sticky Inflation

According to CNBC, Nomura has increased the number of Federal Reserve interest-rate hikes it expects after elevated oil prices and sticky inflation, though it still sees fewer moves than the market is pricing. The Japanese investment bank now forecasts the Fed will raise rates this week and in December, then hold through 2027. A report led by Nomura economist Aichi Amemiya said little inflation progress and a sharp rise in energy prices prompted the revision. Nomura also added forecasts for two more European Central Bank hikes in December and March, saying inflation could stay above target until early 2027 amid the Iran conflict. It said headwinds from the Iran war remain for the second half of 2026 and that growth should improve into 2027. The bank expects three more hikes from the Bank of Japan, but no further increases from the Bank of England or the People's Bank of China, even as markets price more than four hikes for each of those central banks. The CNBC Fed Survey found a majority of respondents now expect at least two rate hikes over the next year, while a third foresee three or more; last month, less than half expected any hike.