The HSBC (LSE:HSBA) share price has been rocketing higher over the past year. It’s up 75% over this period, and trades at 1,340p. If it keeps up this pace of growth, it could hit 2,000p by the end of the year, a further 50% higher than today. Even though some might think this is a rather punchy forecast, here’s why it might not be crazy.

Inflation and interest rates

One major driver that could justify such a rally is a sustained higher-for-longer interest rate environment. The global energy price shock that started in February is causing forecasters to expect global inflation to rise. We’ve already seen this start, as in the March US inflation news last week. This could prompt central banks around the world to raise interest rates this summer to counter inflation.

HSBC is more sensitive to global rates than peers such as Lloyds Banking Group because of its large deposit base and strong global presence. If rates increase, net interest margins expand, boosting profitability. The bank already delivered very strong earnings momentum in 2025, which was a key factor in the sharp share price surge. Therefore, it’s not unrealistic to think that rates moving higher due to inflation could continue to drive the stock further.

The net interest margin in 2025 was 1.59%, up 0.03% from the previous year. If, on average, global central banks increase base rates by 0.5%, the net interest margin for HSBC could tick back up to around 2%. In theory, this should boost net interest income by around 25%, which could act to directly increase profits by a similar amount. If earnings aside from net interest income rally as well, it’s not out of the question to see the share price mirror a 25% jump and then some more, given the speculation and excitement that would exist.

Valuation

Even with the jump in the past year, the price-to-earnings (P/E) ratio is 15.09, below the FTSE 100 average ratio of 17.6. Therefore, there’s scope to move higher even without a large boost to earnings as it’s not overvalued.

If we assume earnings per share don’t change, a move to 2,000p would push the P/E ratio to 22.64. This is by no means excessive. There are other financial services companies with a ratio like this. For example, M&G has a ratio of 23.64.

My point here is that the latest annual results showed that HSBC is doing well on various fronts, ranging from wealth management to expansion in Asia. So even if it just keeps the momentum going, the share price could continue to rise to 2,000p, as investors are happy to buy a stock that’s not overvalued.

The bottom line

Of course, hitting 2,000p by year end is a big statement. There are several reasons this might not happen. There’s geopolitical risk with China operations, especially if trade tensions with the US pick back up again. There’s the concern that high inflation could be bad for the bank if it leads to higher loan defaults. Finally, the company is still undergoing a restructure, so this might not go to plan, which would be a negative.

Ultimately though, I think the HSBC share price is primed to move higher this year, and am seriously thinking about investing.