The Federal Reserve plans to keep interest rates unchanged at its upcoming monetary policy meeting later this month, but will raise borrowing costs again in December.
About 94 out of 100 economists who participated in the survey—conducted between October 16 and 20—said they expect rates to remain in the 3.75%–4.00% range following the meeting on October 27–28.
At the same time, all 100 respondents expect the Fed to raise rates at its final meeting of the year, scheduled for December 8–9, Reuters reports. This marks a sharp increase compared to the previous survey, in which fewer than half of the economists had predicted a rate hike in December.
Last month, the Federal Open Market Committee (FOMC)—the body that sets monetary policy—raised borrowing costs for the first time since 2023, citing the need to curb mounting inflationary pressure driven by a surge in energy prices.
However, most investors are betting that the Fed will opt to skip another hike this month, even though the latest data on price growth for September came in higher than expected.
Instead, traders are closely monitoring signals from Fed officials. Fed Chair Kevin Warsh—continuing the strategy he has employed since taking the helm of the central bank earlier this year—is declining to provide any specific guidance. Other officials, including San Francisco Fed President Mary Daly, argue that while further rate hikes may be necessary in the future, there is no urgent need for an immediate increase at this time. New York Fed President John Williams and Federal Reserve Vice Chair Philip Jefferson have also indicated a preference for waiting for additional economic data before deciding on further rate hikes.
Nearly 60% of economists surveyed by Reuters expect the key interest rate to peak in the 4.00%–4.25% range, though some have pointed to the risk that the Federal Reserve could implement more rate hikes than initially anticipated.