Société Générale expects the Federal Reserve to begin raising interest rates in September, driven by persistent inflation and a strengthening labor market.
The French banking giant believes policymakers are moving toward a more restrictive monetary stance as economic pressures continue to build.
Persistent inflation remains a central concern for Fed officials, who have signaled growing willingness to act decisively in the months ahead.
An improving labor market has added further weight to the case for tightening, giving the central bank more confidence to move without risking economic damage.
Société Générale now forecasts quarter-point rate increases at the Fed’s September and December meetings, with a third hike expected through March.
Each increase would represent a measured, incremental step rather than an aggressive adjustment, reflecting the Fed’s traditional preference for gradual policy shifts.
The forecast puts Société Générale among those on Wall Street expecting the Fed to move sooner rather than later as inflationary pressures prove stubborn.
Central banks globally have faced mounting pressure to tighten policy as inflation has remained elevated well above long-standing target levels in major economies.
The Federal Reserve has historically relied on a combination of labor market data and inflation readings to calibrate the pace and scale of rate adjustments.
A series of three quarter-point hikes would push borrowing costs meaningfully higher, with broad implications for consumer lending, mortgage rates, and business investment.
Markets will be closely watching upcoming Fed communications for any signals that align with or contradict Société Générale’s projected timeline for monetary tightening.
The bank’s forecast adds to an increasingly active debate among economists and investors about how aggressively the Fed will need to act to bring inflation under control.
