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3 Bank Stocks to Buy as Fed Sees 3 Rate Hikes in 2022
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The Federal Reserve recently said that it will end its pandemic-era asset purchases next year to counter the surge in inflation. Also, in all likelihood, the Fed is expected to hike interest rates three times in 2022 to cope with elevated inflation. Lest we forget, prices of essential goods and services are now at their highest level in decades. Nonetheless, with the Fed set to raise rates in the near term, we expect bank stocks to benefit. This calls for investing in stocks like Bank of America (BAC - Free Report) , Eastern Bankshares (EBC - Free Report) , and Veritex (VBTX - Free Report) .
Fed’s Rate Hike Outlook
On Dec 15, the Fed decided to slowly do away with its accommodative monetary policy to boost the economy ravaged by the coronavirus outbreak last year. Notably, 12 Fed officials out of 18 thought that the current economic conditions warrant a minimum of three-quarter point rate increases next year. That’s more than September’s number of nine officials thinking it’s appropriate to hike rates next year.
To top it, 11 Fed officials think that there may be three more rate hikes in 2023, which would eventually lift the benchmark lending rate to a range of 1.5% to 1.75%. At present, the rate is in the range of 0% to 0.25%. Many opine that the Fed may begin hiking rates most probably by next June. At the same time, Fed is anticipated to phase out its bond-buying program by March. Nevertheless, the Fed’s initiative to hike rates and initiate a more aggressive monetary policy is to counter the threat of a surge in inflation.
US Inflation Getting Worse
Fed officials, at the moment, think that inflation would come in at 2.6% next year. That’s more than 2.2% they had projected in September. In fact, Fed officials acknowledged that they were surprised by the sustained increase in prices of goods and services. In their policy statement, the Fed officials banished the word “transitory” and admitted that inflation certainly went past their 2% target “for some time.”
In reality, consumer prices in the United States saw the highest yearly rise in November since 1982. Citing a MarketWatch article, the consumer price index (CPI) soared 6.8% year over year in November, added the Bureau of Labor Statistics. This exceeded analysts’ expectations of an increase of 6.7%. It’s worth pointing out that inflation has now been more than 5% for the sixth successive month, quoting the MarketWatch article.
3 Bank Stocks to Buy Right Away
With an overwhelming Fed official seeing an interest rate hike next year with more to follow, bank stocks are undoubtedly poised to gain. This is because a higher interest rate increases the spread between what banks make by funding longer-term assets, including loans, with shorter-term liabilities, thereby boosting bank profits. We have, thus, highlighted three bank stocks that are worth a buy now.
Bank of America provides a wide range of banking and finance-related services. In the United States, Bank of America is one of the largest financial holding companies. Bank of America’s initiative to improve its digital capabilities and expand its foothold are surely improving its financials. Anyhow, the company currently has a solid balance sheet and a strong liquidity position.
Bank of America, at present, boasts a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for its current-year earnings has moved up 1.8% over the past 60 days. Bank of America’s expected earnings growth rate for the next five-year period is a solid 7%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Eastern Bankshares provides banking services to generally small business houses and retail customers. Eastern Bankshares also provides various investment and insurance-related services through its bank branches.
Currently, Eastern Bankshares has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved up 6.9% over the past 60 days. Eastern Bankshares’ expected earnings growth rate for the next five-year period is a steady 10.8%.
Veritex is known for providing banking services to both corporate and individual customers. Vertex provides loans and an array of online banking services to customers.
Presently, Veritex has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved up 1.5% over the past 60 days. Veritex’s expected earnings growth rate for the next year is a superb 15%.
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3 Bank Stocks to Buy as Fed Sees 3 Rate Hikes in 2022
The Federal Reserve recently said that it will end its pandemic-era asset purchases next year to counter the surge in inflation. Also, in all likelihood, the Fed is expected to hike interest rates three times in 2022 to cope with elevated inflation. Lest we forget, prices of essential goods and services are now at their highest level in decades. Nonetheless, with the Fed set to raise rates in the near term, we expect bank stocks to benefit. This calls for investing in stocks like Bank of America (BAC - Free Report) , Eastern Bankshares (EBC - Free Report) , and Veritex (VBTX - Free Report) .
Fed’s Rate Hike Outlook
On Dec 15, the Fed decided to slowly do away with its accommodative monetary policy to boost the economy ravaged by the coronavirus outbreak last year. Notably, 12 Fed officials out of 18 thought that the current economic conditions warrant a minimum of three-quarter point rate increases next year. That’s more than September’s number of nine officials thinking it’s appropriate to hike rates next year.
To top it, 11 Fed officials think that there may be three more rate hikes in 2023, which would eventually lift the benchmark lending rate to a range of 1.5% to 1.75%. At present, the rate is in the range of 0% to 0.25%. Many opine that the Fed may begin hiking rates most probably by next June. At the same time, Fed is anticipated to phase out its bond-buying program by March. Nevertheless, the Fed’s initiative to hike rates and initiate a more aggressive monetary policy is to counter the threat of a surge in inflation.
US Inflation Getting Worse
Fed officials, at the moment, think that inflation would come in at 2.6% next year. That’s more than 2.2% they had projected in September. In fact, Fed officials acknowledged that they were surprised by the sustained increase in prices of goods and services. In their policy statement, the Fed officials banished the word “transitory” and admitted that inflation certainly went past their 2% target “for some time.”
In reality, consumer prices in the United States saw the highest yearly rise in November since 1982. Citing a MarketWatch article, the consumer price index (CPI) soared 6.8% year over year in November, added the Bureau of Labor Statistics. This exceeded analysts’ expectations of an increase of 6.7%. It’s worth pointing out that inflation has now been more than 5% for the sixth successive month, quoting the MarketWatch article.
3 Bank Stocks to Buy Right Away
With an overwhelming Fed official seeing an interest rate hike next year with more to follow, bank stocks are undoubtedly poised to gain. This is because a higher interest rate increases the spread between what banks make by funding longer-term assets, including loans, with shorter-term liabilities, thereby boosting bank profits. We have, thus, highlighted three bank stocks that are worth a buy now.
Bank of America provides a wide range of banking and finance-related services. In the United States, Bank of America is one of the largest financial holding companies. Bank of America’s initiative to improve its digital capabilities and expand its foothold are surely improving its financials. Anyhow, the company currently has a solid balance sheet and a strong liquidity position.
Bank of America, at present, boasts a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for its current-year earnings has moved up 1.8% over the past 60 days. Bank of America’s expected earnings growth rate for the next five-year period is a solid 7%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Eastern Bankshares provides banking services to generally small business houses and retail customers. Eastern Bankshares also provides various investment and insurance-related services through its bank branches.
Currently, Eastern Bankshares has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved up 6.9% over the past 60 days. Eastern Bankshares’ expected earnings growth rate for the next five-year period is a steady 10.8%.
Veritex is known for providing banking services to both corporate and individual customers. Vertex provides loans and an array of online banking services to customers.
Presently, Veritex has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved up 1.5% over the past 60 days. Veritex’s expected earnings growth rate for the next year is a superb 15%.