Bank of America: Raising interest rates is a scenario that should return to the discussion table of the Federal Reserve.

Analysts at Bank of America presented a research note on Thursday, discussing their analyses regarding U.S. inflation data and upcoming actions by the Federal Reserve, following the Consumer Price Index (CPI) for January, which surprisingly hit a 7-month high, exceeding expectations.

In this context, Bank of America experts stated that the U.S. inflation report delivered another upside surprise; the headline CPI rose by 0.5% in January, pushing the annual rate to 3.0%.

Meanwhile, the core CPI—which excludes food and energy—rose by 0.4%, bringing the annual figure to 3.3%. This reinforced the U.S. Federal Reserve's stance to pause its interest rate-cutting cycle.

The analysts wrote that the bottom line is clear: the Federal Reserve has no reason to lower rates further, indicating that inflation remains stuck above the Fed's 2% target and that the unemployment rate has nearly dropped to around 3% in January.

While Bank of America economists see a low likelihood of further rate hikes, the bank argues that tightening should now return to the decision-making table following stronger-than-expected inflation data.