BNP Paribas Predicts Three Fed Rate Hikes Amid Strong U.S. Jobs Report

Financial giant BNP Paribas has predicted three Fed rate hikes as the U.S. labor market holds strong while inflation continues to rise due to the U.S.-Iran war. Notably, crypto market participants are also pricing in a hike, with the Polymarket odds rising to a new high following the latest jobs data.

BNP Paribas Predicts Three Fed Rate Hikes Starting in December

In a Markets 360 analysis, the bank stated that it is changing its Fed call to rate hikes and now expects the U.S. central bank to reverse the three insurance rate cuts it made in 2025 at sequential FOMC meetings, starting in December. They said that the aim of these hikes will be to reduce the level of monetary stimulus, contain inflation expectations, and stabilize the unemployment rate at a low level.

BNP Paribas further noted that the U.S. employment rate looks set to decline gradually going forward, dropping to 4% by year-end. Their forecast of Fed rate hikes comes amid the release of the latest U.S. jobs report.

As CoinGape reported, nonfarm payrolls surged by 172,000 last month, well above estimates of 85,000, signaling that the labor market remains strong despite concerns about weakness. Meanwhile, the unemployment rate remained unchanged at 4.3%.

Market participants are also pricing in the possibility of a Fed rate hike this year, especially as rising inflation appears to be the Fed’s primary concern at the moment. Polymarket data shows a 50% chance of a hike this year, with the odds rising to a new high following the release of the jobs report.

Furthermore, CME FedWatch data shows a 42.4% chance of a Fed rate hike by December 2026. These traders expect the Fed interest rate to remain unchanged until then, with a slim chance of a rate cut between now and then.

Fed’s Hammack Warns They May Need To Act Soon

In a LinkedIn post, Fed president Beth Hammack said that for today, it is reasonable to keep rates steady, given the uncertainties around the economic outlook. However, she warned that it may soon be appropriate to act if recent trends continue.

It is worth noting that Hammack was one of the dissenters in the last FOMC meeting, voting against including the easing bias in the post-FOMC statement. The FOMC minutes had also signaled there was broad support for a Fed rate hike if inflation persists.

Market expert Nick Timiraos noted that Hammack’s statement about acting soon likely translates to hiking interest rates. However, he noted that the Fed president is unlikely to vote for a hike at the June FOMC meeting, and that it will be interesting to hear from her after the meeting to gauge where she stands ahead of the July meeting.