Survey: Economists see a Fed hike this week, and at least one more by end-March 2027
AI Market Summary
A Reuters survey signals a renewed consensus for a 25 bp Fed hike this week and rising odds of another by end-March, following a stronger inflation print. This reprices the policy path toward higher-for-longer rates, tightening financial conditions and supporting the USD while pressuring duration-sensitive assets and risk. The disappearance of expected cuts into 2027 reinforces restrictive-rate expectations and increases near-term volatility around rates, FX, and equity valuations.
Impact level
● High
Affected assets
NCSIDXY2USD/USDT+0.62%
AI Insight · NCSIDXY2USD/USDTAI Insight
▼ Bearish
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A Reuters poll shows economists have swung back toward expecting tighter U.S. monetary policy, with most now forecasting the Federal Reserve will raise rates this week and deliver at least one additional increase before the end of March 2027.
After Friday's inflation report, 85% of respondents said they expect a 25-basis-point hike at the Fed's September meeting, which would lift the target range to 3.75%4.00% and mark the first increase since July 2023. Nearly 53% now anticipate at least one more hike by end-March, reversing last week's fragile consensus, when 56% expected rates to remain unchanged.
The earlier prevailing view that rates would be cut by 2027 has now vanished from the survey.
Stephen Juneau, senior economist at Bank of America, said the Fed has "essentially boxed itself in" and would only stop hiking if the data turns "extremely weak." Juneau has maintained a call for three hikes this year since June, adding: "We hadn't reached that expectation… then came this inflation report, and the outlook became much clearer." (Jin10)
