Reuters Poll: Fed to Skip Rate Hike in October, Expected to Raise Rates by 25 Basis Points in December
nashnova research
A Reuters poll of 100 economists shows 94 expect the Fed to hold rates in October, yet all 100 now forecast a December hike — the debate has shifted from 'whether to raise' to 'how fast.'
Why no hike in October?
94 economists expect the Fed to hold the funds rate at 3.75%–4.00%, in line with market pricing.
This means → with midterm elections just days away, the Fed is choosing to stay put rather than send a signal in a politically sensitive window.
In plain terms = it is not that the economy doesn't need a hike — the timing is too loaded, so the Fed would rather wait a month.
Why has a December hike become unanimous?
All 100 economists now expect a December rate increase; fewer than half held that view in last month's poll.
The FOMC — the Fed's rate-setting committee — already voted unanimously to raise rates by 25 basis points in September.
This means → a 25 bp December hike is the baseline; the real question is whether the Fed goes straight to 50 bp.
Mizuho senior economist Alex Pelle criticized the Fed: with a strong economy and high inflation, there is no reason not to move faster — the Fed is "standing still, and may already be behind the curve."
How high will rates ultimately go?
Nearly 60% of forecasters see rates peaking at 4.00%–4.25%.
But 38 out of 92 respondents expect at least two more hikes — up sharply from roughly one-fifth in September's poll.
Morgan Stanley chief U.S. economist Michael Gapen warned: risks tilt toward the Fed needing to hike more than expected, with both the economic and inflation outlooks skewed to the upside.
This reflects a cracking of Wall Street's confidence in the "mild tightening" narrative — more forecasters are betting the peak will be higher.
When will inflation get back to 2%?
The Fed's preferred gauge, the PCE price index — a broad measure of consumer inflation — will stay more than 100 basis points above the 2% target for several quarters.
The survey median says inflation won't return to target until 2028 at the earliest — it has exceeded 2% for nearly six consecutive years.
Key drivers: the Trump administration's conflict with Iran is pushing up energy costs, compounded by new tariffs; oil remains above $100 a barrel.
In plain terms = inflation is not "almost fixed" — it is a multi-year grind, and that is also a political vulnerability for Republicans heading into the midterms.
The economy is strong — where is the growth coming from?
U.S. GDP grew at an annualized 2.2% in Q2, is forecast to accelerate to 3.2% in Q3, and to ease back to 2.2% in Q4.
AI-driven investment is the main engine; UBS economist Abigail Watt noted that consumer resilience is largely driven by high-income households benefiting from AI spillover effects.
This means → growth keeps running above the Fed's 2.0% estimate of non-inflationary speed, making it harder for inflation to cool.
Why is the bond market swinging so violently?
Fed Chair Kevin Warsh has made clear he does not favor forward guidance, and the gap between officials' signals and economic data has amplified market volatility.
The 10-year Treasury yield hit a multi-decade high on October 7, then fell nearly 25 basis points as October hike expectations faded.
This reflects a market — and economists — that are tracking the Fed's policy signals more than the data itself.
In plain terms = investors are trying to read the Fed's mind rather than the economy's fundamentals — whether this guessing game resolves by year-end is the next key test.
市场有风险，内容仅供研究参考，不构成投资建议。