All 101 economists surveyed expect a 25bp Fed hike in December, though persistent inflation forecasts and Governor Waller's warning of a potential 50bp move keep the outlook for further tightening uncertain.
All 101 economists in the Reuters poll see a 25bp hike on December 9 taking the target range to 4.00%-4.25%, and Governor Waller said on Tuesday he would still support a 25bp increase even if October inflation cools. Higher US rates make dollar assets more attractive, supporting USD. However, the unanimous call suggests the move is largely priced in, and the 56-45 split over whether December is the final hike caps the upside.
A unanimous expectation of a 25bp Fed hike on December 9, plus Waller's warning that a half-point move may be needed if core CPI runs around 0.3% or higher, points to higher policy rates ahead. Persistent PCE inflation above 3% until 2028 at the earliest reinforces the case for higher long-term yields. The slim majority expecting December to be the last hike tempers the move.
The unanimous 25bp December 9 hike call and Waller's openness to a half-point move if core CPI is around 0.3% or higher point to more restrictive policy, which raises discount rates for equities. Inflation staying above 3% until 2028 at the earliest adds pressure. The mild offset is that a slim majority still expects December to be the final hike.
A Reuters poll of 101 economists shows unanimous support for a 25 basis point rate hike on December 9, pushing the target range to 4.00%-4.25%. While Fed Governor Christopher Waller signaled openness to a 50 basis point move if core CPI hits 0.3% or higher, the market remains divided on the cycle's end, with 56 economists expecting December to be the final increase.
Higher interest rates make the US a more attractive place for international investors to park money, which strengthens the US Dollar, as the article's FAQ section explains.
All 101 economists polled by Reuters between November 6 and 10 expect a 25 basis point hike on December 9, so it is fully expected; the disagreement is over whether further hikes follow after that.
A unanimous call for a 25bp hike in December to a 4.00%-4.25% target range, with 45 of 101 economists expecting at least two more increases, points toward higher rates, which typically lifts benchmark government bond yields.
Higher rates raise borrowing costs across the economy and make bonds more attractive relative to stocks, which weighs on equity valuations, especially with inflation expected to stay above 3% into 2028.