Reuters Poll: 94 Economists Expect the Fed to Hold in October; All 100 Expect a December Hike
The U.S. Federal Reserve will hold interest rates at its October 27-28 meeting and deliver a hike in December, according to a Reuters survey published on October 20 — now the mainstream view among economists. Of the 100 economists surveyed between October 16 and 20, 94 expect the central bank to keep the federal funds rate in a 3.75%-4.00% range in October, in line with market pricing, while all 100 expect a rate hike in December — a sharp reversal from fewer than half saying so in last month's poll.
The Federal Open Market Committee unanimously raised rates by 25 basis points in September. Nearly 60% of forecasters now see the policy rate peaking in a 4.00%-4.25% range, and 38 of the 92 who answered the question predict at least two further increases, up from one-fifth in the September survey. Fed Chair Kevin Warsh has given no clear guidance lately. Alex Pelle, senior U.S. economist at Mizuho Securities, told Reuters that holding in October is "the wrong call from a policy point of view" given a strong economy and stubborn inflation, adding that a 25-basis-point hike in December is likely, and the risk is greater that the Fed ends up hiking 50 basis points than not hiking at all.
Inflation is the main driver of the shift. Reuters reported that inflation has run above the Fed's 2% target for nearly six years, and poll medians show the Personal Consumption Expenditures Price Index, the Fed's preferred gauge, staying more than 100 basis points above target over coming quarters and not returning to target until at least 2028. Higher energy costs tied to the war with Iran and new tariffs have pushed living costs up, with oil holding above $100 a barrel. The October meeting falls just days before the November 3 midterm elections; Reuters noted the Fed insists the timing has nothing to do with the elections.
U.S. stocks have already felt the hawkish turn: GSM reported on October 24 that stocks closed lower on Friday, with the Dow down 653 points, as surging oil prices and Treasury yields back above 5% weighed on the market. With the survey out, attention turns to the October 27-28 meeting itself — expected, per the poll, to hold steady, with the actual hike landing in December.
Published by GSM · USA (original Chinese edition)
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