Reuters survey: Most economists expect the Federal Reserve to raise interest rates by 25 basis points this week

According to a Reuters survey, most economists believe that the Federal Reserve will raise interest rates this week and will hike at least once more before the end of March next year, reversing the previously fragile consensus that rates would remain unchanged. Following last Friday's inflation report, the Reuters survey showed that 85% of economists expect the Federal Reserve to raise rates by 25 basis points at the September meeting, bringing rates to 3.75%-4.00%, marking the first hike since July 2023. Nearly 53% of forecasters anticipate at least one more rate hike by the end of March, whereas last week 56% believed rates would remain unchanged. The mainstream view of rate cuts in 2027 no longer exists. Stephen Juneau, senior economist at Bank of America, noted: “Waller has essentially boxed himself in: The only way the Fed will forgo a rate hike is if the data turns out to be very weak.” He has expected three rate hikes this year since June. “We hadn’t reached that outlook… then we got this inflation report, and things became even clearer.”