Fed to raise rates once more in December as inflation risks stay high
TLT•All 101 economists in a November 6-10 poll forecast a 25-basis-point Fed rate hike in December, to a 4.00%-4.25% range. A majority expect it to be the final increase in the current cycle, while inflation is projected to remain above the Fed’s 2% target through at least 2028.
1. December hike forecast
All 101 economists surveyed forecast the Federal Reserve will raise its federal funds rate by 25 basis points in December, to a 4.00%-4.25% range. The Fed raised rates in September and paused in October.
2. Views diverge on next steps
Fifty-six of 101 economists expect the December move to end the current rate-hiking cycle, while 45 expect at least two more increases. Twenty-nine of 37 economists who answered an additional question said their medium-term inflation outlook had not changed since the midterm elections.
3. Inflation and growth outlook
Poll medians show the Fed’s preferred PCE inflation gauge averaging 3.5% this year and 2.6% next year, and remaining more than a percentage point above the Fed’s 2% target over coming quarters. Economists forecast 2.2% economic growth this quarter and 2.4% growth for the year.
