Bank of America (BofA) has reaffirmed its base case expectation that the Federal Reserve will not implement a rate hike in June, though the bank maintains an inclination towards a hike in the future, noting that it's a "close call".

According to BofA, three conditions need to be met for a Fed rate hike: 1) strong economic data, 2) an increase in the debt ceiling, and 3) subdued regional bank stress.

The bank also believes that inflation remains too persistent for the Fed to commit to a prolonged pause in rate increases. Even if the Fed decides to forego a rate increase in June, BofA suggests that it will keep the possibility of a July hike on the table.