Survey: Economists Now See a Fed Rate Hike This Week, With Another Likely by End-March
AI Market Summary
A Reuters survey shows economists now expect a 25bp Fed hike at the September meeting, with a growing share forecasting at least one additional hike by end-March, reversing the prior consensus for steady policy and erasing expectations of cuts by 2027. A higher-for-longer rates path tightens financial conditions and supports the dollar, pressuring risk assets and duration-sensitive exposures in the near term.
Impact level
● High
Affected assets
NCSIDXY2USD/USDT+0.62%
AI Insight · NCSIDXY2USD/USDTAI Insight
▼ Bearish
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A Reuters survey shows economists have shifted away from the earlier, shaky consensus that the Federal Reserve would keep rates unchanged. After last Friday's inflation data, 85% of respondents said they expect the Fed to raise rates by 25 basis points at its September meeting, lifting the target range to 3.75%–4.00% and marking the first increase since July 2023.
Nearly 53% of economists now forecast at least one additional hike by the end of March, versus 56% in last week's poll who expected no change. The previously common expectation of rate cuts by 2027 has also faded.
Stephen Juneau, a senior economist at Bank of America, said: "Wash has essentially boxed himself into a corner where the Fed will only stop raising rates if the data shows very weak performance." Juneau added he has projected three rate hikes this year since June, and said the latest inflation report "made the situation much clearer." (Jin10)
