- CNBC’s latest Fed Survey of 30 fund managers, strategists and economists found that 93% expect the Fed to hold rates at this week’s meeting, while 76% expect a hike in December. More than half say the Fed will raise rates next year by an average of about two hikes.
- Thirty percent said the Fed should hike now, and respondents expect at least two voters to dissent from a hold. A plurality of 40% say the Fed must slow growth below potential to solve inflation, and 70% see the inflation problem as broader than energy.
- Respondents put recession odds at 26%, down from 29%, and see GDP growth of 2.4% this year and 2.2% in 2027. They expect CPI inflation to ease to 3.6% from 3.7% this year and fall to 2.6% next year, with unemployment rising to 4.4% in 2027.
- The S&P 500 forecast for 2027 fell to 8,033 from 8,274, about 4.7% above Monday’s 7,676 close (Lumida calculation). Respondents see the 10-year yield staying above 5% this year before easing to 4.8% in 2027, and more than half expect Democrats to win both houses of Congress.
What Happened?
CNBC’s Fed Survey, conducted before every Fed meeting, found broad agreement that the central bank will pause this week but tighten further soon. Janus Henderson’s Richard Bernstein called the Fed’s hesitancy to hike “unfathomable” with nominal GDP running 6% to 8%. Moody’s Mark Zandi disagreed, saying “this isn’t the time for more Fed rate hikes” as real wages fall and rates rise. Respondents forecast US crude at $88 a barrel in six months, below the current $101.
Why It Matters?
The survey shows Wall Street expects a hawkish path even as the Fed holds, meaning markets may focus less on this week’s decision than on signals for December. Respondents named a continuation of the Iran war and the bursting of the AI bubble as the biggest risks. On bond yields, 50% blamed government debt supply and 13% debt for the AI buildout, while a third said both contributed equally.
What’s Next?
Investors will look to the Fed statement and Chair Warsh’s press conference for confirmation of a December hike. Sixty-three percent see some market risk from legal challenges that could extend uncertainty over control of Congress after next week’s election, and 41% expect higher deficits. Inflation data before December will be key to whether the expected hikes happen.
Affected Tickers and Coins: SPY, TLT
Source: CNBC
