That view lined up with the survey's median projection for the first cut to come in early 2024. In response to an additional question, more than 60% of respondents, 55 of 89, said the Fed was more likely to hold rates steady for at least the rest of the year than cut. Inflation was predicted to drop further, but remain above the Fed's 2% target for years to come, leaving a relatively slim chance of rate cuts anytime soon. The interest rate view in the survey was slightly behind the Fed's recent projections, but the poll medians for growth, inflation and unemployment were largely in line. There was no clear consensus on where the Fed's policy rate would be at the end of 2023, but around two-thirds of respondents had a forecast for 4.75%-5.00% or higher. The expected terminal rate would be more than double the peak of the last tightening cycle and the highest since mid-2007, just before the global financial crisis. inflation shows price pressures are easing, yet in an environment of a strong jobs market, the Federal Reserve will be wary of calling the top in interest rates," noted James Knightley, chief international economist at ING. That matched interest rate futures pricing, but was 25 basis points lower than the median point for 2023 in the "dot plot" projections issued by Fed policymakers at the end of the Dec. The fed funds rate was expected to peak at 4.75%-5.00% in March, according to 61 of 90 economists. primary dealer bank that deals directly with the Fed. The remaining 15 see a 50-basis-point hike coming in two weeks, but only one of those was from a U.S. If realized, that would take the policy rate - the federal funds rate - to the 4.50%-4.75% range. The Fed raised its benchmark overnight interest rate by 425 basis points last year, with the bulk of the tightening coming in 75- and 50-basis-point moves.Īs inflation continues to decline, more than 80% of forecasters in the latest Reuters poll, 68 of 83, predicted the Fed would downshift to a 25-basis-point hike at its Jan. central bank should slow the pace of tightening to assess the impact of the rate hikes. Federal Reserve will end its tightening cycle after a 25-basis-point hike at each of its next two policy meetings and then likely hold interest rates steady for at least the rest of the year, according to most economists in a Reuters poll.įed officials broadly agree the U.S.
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