A Reuters survey found that most economists now expect the Federal Reserve to raise interest rates this week and deliver at least one additional hike by the end of March next year, reversing what had been a fragile consensus for no change in rates. After last Friday’s inflation report, 85% of respondents said the Fed would raise rates by 25 basis points at its September meeting, taking the policy rate to 3.75%-4.00%. That would mark the first rate increase since July 2023. Nearly 53% of forecasters also said they expect at least one more hike by the end of March, compared with 56% a week earlier who had expected rates to remain unchanged. Reuters said the once-mainstream view of rate cuts in 2027 has now faded. Bank of America senior economist Stephen Juneau said Fed Governor Waller had effectively backed himself into a position where the central bank would only avoid hiking if incoming data turned very weak. Juneau added that he has expected three rate hikes this year since June, and said the latest inflation report made that outlook clearer.
Most economists expect the Federal Reserve to raise interest rates this week and then deliver at least one more increase by the end of March next year, according to a Reuters survey cited by Odaily.
The survey said that view reversed what had previously been a fragile consensus that rates would stay unchanged.
Following last Friday’s inflation report, 85% of economists surveyed by Reuters said the Fed would raise rates by 25 basis points at its September meeting, bringing the policy rate to 3.75%-4.00%. If that happens, it would be the first rate hike since July 2023.
Reuters also found that nearly 53% of forecasters expect at least one additional rate increase by the end of March. A week earlier, 56% had said they expected rates to remain unchanged.
The report added that the mainstream expectation for rate cuts in 2027 has now disappeared.
Stephen Juneau, a senior economist at Bank of America, said: 「Waller has effectively backed himself into a corner where the Fed will only refrain from hiking if the data come in very weak.」
Juneau said he has expected three rate hikes this year since June. 「We were not quite there before ... then we got this inflation report, and the picture became clearer,」 he said.
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