Hike rates

Economists say the Fed will raise rates by 75 basis points on November 2

Economists estimate the US Federal Reserve will make a fourth consecutive 75 basis point hike in interest rates on November 2, according to a Reuters poll. They agree that the Fed should not slow increases until inflation falls to half of today’s 8.2%.

86 of 90 economists polled Oct. 17-24 predicted the fed funds rate would rise 75 basis points to 3.75% to 4% at the next Fed meeting, as inflation is consistently high and unemployment figures are near pre-pandemic lows.

Authorities are raising rates faster and more aggressively than they have in the past four decades. The 75 basis point rise in June was the first since 1994. With that, the survey showed an increased likelihood of a recession next year from 45% to 65%.

“Instead of a pivot, in our view, the Fed is signaling that it plans to move from early loading through December to a faster rate of increases from then on,” Jan Groen said. , chief US macroeconomic strategist at TD. Securities.

The next Fed meeting will prove crucial in planning the trajectory for the next few months, as this, and not just the rise in the current meeting, will influence broader financial conditions. “We will have a very in-depth discussion on the pace of tightening at our next meeting,” Fed Governor Christopher Waller said in a speech earlier this month.

The decision will be up to Jerome Powell, who at the end of august says that the Fed will not relax its hawkish monetary policy, despite the economic difficulties caused by the rise in interest rates.

The CME Group says investors in the interest rate futures markets are now seeing a rise of up to 5% by spring, a significant increase from most officials forecasting 4.6%.

In the Reuters survey, economists’ responses suggest the Fed’s turning point should be at half the current inflation rate. They don’t expect that to happen until the second quarter of 2023, with projected averages showing 8.1% in 2022, 3.9% in 2023 and 2.5% in 2024.

Information for this briefing was found via Reuters, the Wall Street Journal and the sources mentioned. The author has no security or affiliation related to this organization. Not a buy or sell recommendation. Always do additional research and consult a professional before purchasing a title. The author holds no license.