But there is concern the central bank could tip the economy into a recession by hiking rates too aggressively.
"Risks are low this year, as the economy has plenty of momentum and it will take time for Fed hikes to impact growth," BofA economists said in a note Friday. .As the Fed lifts interest rates to 3.4% by May next year, there will be an ongoing slowdown in the economy, according to BofA."If the economy does tumble into a recession, it will likely be mild by historic standards," BofA said."Second, we don't think the Fed has to do all the work in raising the unemployment rate: workers returning to the job market will help," they saidThe third reason is they see the Fed as relatively dovish, and believe it will stop hiking rates once the unemployment rate starts rising and underlying inflation falls to to 3%, rather than to its 2% target