Analysts: Fed Expected to Raise Rates This Week, With at Least One More Hike to Follow

Odaily News: According to a Reuters survey, most economists believe the Federal Reserve will raise interest rates this week and hike at least once more before the end of March next year, reversing the previously widespread and fragile consensus that rates would remain unchanged. Following last Friday's inflation report, the Reuters survey showed that 85% of economists expect the Fed to raise rates by 25 basis points at its September meeting, bringing the rate to 3.75%-4.00%, which would be the first rate hike since July 2023. Nearly 53% of forecasters expect at least one more hike by the end of March, compared with 56% who believed rates would remain unchanged last week. The prevailing view of rate cuts in 2027 no longer exists.

Stephen Juneau, a senior economist at Bank of America, said: "Warsh has effectively backed himself into a corner: the Fed will only abandon a rate hike if the data comes in very weak." He has been forecasting three rate hikes this year since June. "We hadn't reached that expectation... then we received this inflation report, and the situation became much clearer." (Jinshi)