More Uncertainty Over Interest Rate Hikes? Majority of Economists in Bloomberg Survey Expect Fed to Skip Rate Hikes This Year
57 minutes ago
Bloomberg conducted a new survey of 48 economists between September 4 and 9. The results showed only 13 respondents expected the U.S. Federal Reserve (Fed) to raise interest rates at its meeting this month. The vast majority of economists judged that, due to recent marginal slowdown in inflation and the approaching U.S. midterm elections, policymakers will keep rates on hold at both the September and October meetings. However, this institutional consensus leaning toward "patience" stands in stark contrast to market pricing: financial market investors currently assign a 70% probability to a rate hike next week. This sharp divergence in expectations largely reflects the extreme uncertainty surrounding the direction of short-term monetary policy under Fed Chair Wash. The resurgence of rate hike bets stems directly from the hawkish signals Wash delivered last month at the Jackson Hole Economic Symposium in Wyoming, where he warned that inflation had not seen meaningful moderation. In addition, the Fed’s October policy meeting is just a few days away from the U.S. midterm elections on November 3. Regarding this unique timing, half of the surveyed economists noted that the meeting’s proximity to the election means policymakers will need "particularly strong data" to dare adjust rates ahead of the vote. Still, 43% of respondents believe the election will not have a material impact on monetary policy decisions.
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