Fed to raise rates once more in December as inflation risks stay high
TLT•All 101 economists in a November 6-10 poll expect the Fed to raise rates by 25 basis points in December to 4.00%-4.25%. Fifty-six of 101 expect that move to end the current rate-hiking cycle.
1. December rate outlook
The Federal Reserve is expected to raise its benchmark rate by 25 basis points in December to a 4.00%-4.25% range, according to all 101 economists surveyed. The Fed raised rates in September and paused in October. Fifty-six economists expect December's increase to be the final move in the current cycle, while 45 see at least two more increases.
2. Inflation risks persist
Twenty-nine of 37 economists who answered an additional question said their medium-term inflation risk assessment had not changed since the midterm elections. Poll medians show the Fed's preferred PCE price index averaging 3.5% this year and 2.6% next year, and remaining above the Fed's 2% target until at least 2028.
3. Growth forecasts
The economy is forecast to grow 2.2% this quarter after expanding at a 3.4% annualized pace in the third quarter. Annual growth is forecast at 2.4% this year and 2.2% in 2027. Twenty-seven of 41 economists said their view on AI capital spending had not changed since the midterm elections.
