CoinTelegraph reports—Survey shows 93% of respondents expect the Fed to hold rates steady this week, 76% anticipate a rate hike in December, and more than half believe there will be about two more hikes next year. 70% think inflation is a broader issue than energy, 40% believe growth must be kept below potential, and 30% think a rate hike should occur this week. The probability of recession has dropped to 26%, the 10-year yield is expected to remain above 5% this year, and the biggest risks are Iran’s situation and the AI bubble.
According to the latest survey by the media on the Federal Reserve, 93% of respondents expect the Fed to hold rates steady at this week’s meeting, but 76% anticipate a rate hike at the next meeting in December, with more than half believing there will be approximately two more hikes next year. 70% think inflation is broader than just rising energy prices. 40% believe the Fed must allow growth to fall below its potential level to address inflation. 30% think a rate hike should occur at this meeting, with respondents expecting at least two Fed voting members to dissent.
The Federal Reserve has a lot of work to do, but it won’t do it in October. This is the key finding from the latest media survey on the Federal Reserve.
The survey of 30 fund managers, strategists, and economists showed that 93% expect the Fed to hold rates steady at this week’s meeting, 76% anticipate a rate hike at the next meeting in December, and more than half believe the Fed will raise rates approximately two more times on average next year.
Richard Bernstein, Head of Global Macro at Janus Henderson Investors, said: "After monetary and fiscal generosity has persisted for so long, nominal GDP has been running at 6% to 8%, and inflation leading indicators have consistently been elevated, their hesitation to raise rates is perplexing."
40% of respondents (the highest percentage) said the Fed must allow growth to fall below its potential level to address inflation. In comparison, 27% believe the Fed does not need to slow the economy, and 23% think only a slight slowdown is needed.
The survey found that 70% believe inflation is a broader issue than just rising energy prices. The U.S.crude benchmark is expected to be $88per barrel in six months, up from $82 per barrel in the September survey but below the current level of $101 per barrel.
When asked what the Federal Reserve should do at this meeting, 30% said interest rates should be raised now. Respondents expect at least two Federal Reserve voting members to dissent from the decision to hold rates steady.
John Ryding, Chief Economic Advisor at Brean Capital, said: "The total demand data (possibly exceeding 7%) and inflation data indicate a strong need for rate hikes."
Not everyone agrees. Some are concerned about economic weakness. “The situation in Iran is escalating, real wages are falling, interest rates are rising, and AI-driven stock markets appear unstable,” wrote Mark Zandi, Chief Economist at Moody’s Analytics. “Inflation is high, but there is little sign it is becoming entrenched. Now is not the time for the Federal Reserve to raise rates further.”
Despite facing multiple shocks and challenges such as high inflation, expected interest rate hikes, and persistently high oil prices, respondents believe that economic growth will remain above its potential level. The GDP forecast for this year has been raised to 2.4%, to 2.2% in 2027, and 2.05% in 2025, all still above the potential level.
Respondents overall believed the risk of the United States entering a recession over the next year is 26%, lower than the 29% in the previous survey.
The S&P 500's outlook for this year remains steady at approximately 7,600 points, while next year's forecast has been lowered from 8,274 points in the previous survey to 8,033 points. The index closed at 7,676 points on Monday. The unemployment rate is expected to remain stable at 4.2% for the remainder of this year and rise to 4.4% by 2027. CPI is projected to decline from 3.7% in September to 3.6%, then drop significantly to 2.6% next year.
The greatest risks are the ongoing situation in Iran and the bursting of the AI bubble.
Rob Morgan, Senior Vice President and Market Strategist at MOSAIC, said: "In all future conversations with President Trump, Federal Reserve Chair Walsh needs to repeat this maxim: The fastest way to reduce U.S. inflation is to end tariff rhetoric and resolve the Iran situation."
Respondents cited high inflation, high growth, substantial debt issuance, and expectations of higher federal funds rates in nearly equal proportions as causes of high bond yields. When specifically asked which supply posed a greater issue, 50% identified government debt, 13% identified debt financing AI infrastructure, but one-third believed both contributed equally to rising yields.
On average, respondents expect the 10-year yield to remain above 5% this year and decline slightly to 4.8% by 2027. Subodh Kumar, President of Subodh Kumar & Associates, said: “Inflation remains stubborn under energy and trade pressures... a U.S. Treasury benchmark yield above 5% represents a new range, not an anomaly.”
Congressional elections are also seen as a market risk: 63% of respondents believe that legal challenges could prolong uncertainty over which party controls Congress, thereby posing a certain market risk.
John Donaldson, Head of Fixed Income at Haverford Trust Co., said: "The possibility that election uncertainty persists is one of the major near-term risks facing the market, and it is well known how much markets dislike uncertainty."
More than half of respondents indicated that the most likely outcome of next week’s congressional elections is Democratic control of both chambers, up from 29% in the previous survey. 40% believe the Democrats will control the House but not the Senate. Most think the election results will have little impact on personal or corporate taxes, but 41% expect the deficit to rise.
However, this concern is not related to respondents' expectations of which party will control Congress. Personal growth forecasts also vary only slightly based on respondents' beliefs about which party will control Congress.
According to the latest Fed survey by the media, 93% of respondents expect the Fed to hold rates steady at this week’s meeting, 76% anticipate a rate hike in December, and more than half believe there will be about two more hikes next year. 70% think inflation is broader than just rising energy prices, 40% believe the Fed must allow growth to fall below its potential level to tame inflation, and 30% think a hike should occur this meeting, with at least two voting members expected to dissent. Despite multiple shocks, respondents still forecast GDP growth of 2.4% this year and 2.2% in 2027, with the recession probability declining to 26%. 50% view government debt as the larger driver of rising bond yields, with the 10-year yield expected to remain above 5% this year. 63% consider legal challenges to election outcomes a market risk, and more than half expect Democrats to control both chambers of Congress. The greatest risks are ongoing tensions in Iran and a burst AI bubble.
Key findings: 93% expect a pause this week, 76% expect a rate hike in December
The Federal Reserve has a lot of work to do, but it won’t do it in October. This is the key finding from the latest media survey on the Federal Reserve.
The survey of 30 fund managers, strategists, and economists showed that 93% expect the Fed to hold rates steady at this week’s meeting, 76% anticipate a rate hike at the next meeting in December, and more than half believe the Fed will raise rates approximately two more times on average next year.
Richard Bernstein, Head of Global Macro at Janus Henderson Investors, said: "After monetary and fiscal generosity has persisted for so long, nominal GDP has been running at 6% to 8%, and inflation leading indicators have consistently been elevated, their hesitation to raise rates is perplexing."
Inflation outlook: 70% believe the issue is broader than energy, 40% think growth needs to be held below potential levels
40% of respondents (the highest percentage) said the Fed must allow growth to fall below its potential level to address inflation. In comparison, 27% believe the Fed does not need to slow the economy, and 23% think only a slight slowdown is needed.
The survey found that 70% believe inflation is a broader issue than just rising energy prices. The U.S.crude benchmark is expected to be $88per barrel in six months, up from $82 per barrel in the September survey but below the current level of $101 per barrel.
When asked what the Federal Reserve should do at this meeting, 30% said interest rates should be raised now. Respondents expect at least two Federal Reserve voting members to dissent from the decision to hold rates steady.
John Ryding, Chief Economic Advisor at Brean Capital, said: "The total demand data (possibly exceeding 7%) and inflation data indicate a strong need for rate hikes."
Not everyone agrees. Some are concerned about economic weakness. “The situation in Iran is escalating, real wages are falling, interest rates are rising, and AI-driven stock markets appear unstable,” wrote Mark Zandi, Chief Economist at Moody’s Analytics. “Inflation is high, but there is little sign it is becoming entrenched. Now is not the time for the Federal Reserve to raise rates further.”
Growth and Risk: GDP forecast for this year raised to 2.4%, recession probability lowered to 26%
Despite facing multiple shocks and challenges such as high inflation, expected interest rate hikes, and persistently high oil prices, respondents believe that economic growth will remain above its potential level. The GDP forecast for this year has been raised to 2.4%, to 2.2% in 2027, and 2.05% in 2025, all still above the potential level.
Respondents overall believed the risk of the United States entering a recession over the next year is 26%, lower than the 29% in the previous survey.
The S&P 500's outlook for this year remains steady at approximately 7,600 points, while next year's forecast has been lowered from 8,274 points in the previous survey to 8,033 points. The index closed at 7,676 points on Monday. The unemployment rate is expected to remain stable at 4.2% for the remainder of this year and rise to 4.4% by 2027. CPI is projected to decline from 3.7% in September to 3.6%, then drop significantly to 2.6% next year.
The greatest risks are the ongoing situation in Iran and the bursting of the AI bubble.
Rob Morgan, Senior Vice President and Market Strategist at MOSAIC, said: "In all future conversations with President Trump, Federal Reserve Chair Walsh needs to repeat this maxim: The fastest way to reduce U.S. inflation is to end tariff rhetoric and resolve the Iran situation."
Bond yields: 50% believe government debt is the larger source; the 10-year yield is expected to remain above 5% this year.
Respondents cited high inflation, high growth, substantial debt issuance, and expectations of higher federal funds rates in nearly equal proportions as causes of high bond yields. When specifically asked which supply posed a greater issue, 50% identified government debt, 13% identified debt financing AI infrastructure, but one-third believed both contributed equally to rising yields.
On average, respondents expect the 10-year yield to remain above 5% this year and decline slightly to 4.8% by 2027. Subodh Kumar, President of Subodh Kumar & Associates, said: “Inflation remains stubborn under energy and trade pressures... a U.S. Treasury benchmark yield above 5% represents a new range, not an anomaly.”
Election risk: 63% view legal challenges as a market risk; more than half expect Democrats to control both chambers.
Congressional elections are also seen as a market risk: 63% of respondents believe that legal challenges could prolong uncertainty over which party controls Congress, thereby posing a certain market risk.
John Donaldson, Head of Fixed Income at Haverford Trust Co., said: "The possibility that election uncertainty persists is one of the major near-term risks facing the market, and it is well known how much markets dislike uncertainty."
More than half of respondents indicated that the most likely outcome of next week’s congressional elections is Democratic control of both chambers, up from 29% in the previous survey. 40% believe the Democrats will control the House but not the Senate. Most think the election results will have little impact on personal or corporate taxes, but 41% expect the deficit to rise.
However, this concern is not related to respondents' expectations of which party will control Congress. Personal growth forecasts also vary only slightly based on respondents' beliefs about which party will control Congress.
Summary
According to the latest Fed survey by the media, 93% of respondents expect the Fed to hold rates steady at this week’s meeting, 76% anticipate a rate hike in December, and more than half believe there will be about two more hikes next year. 70% think inflation is broader than just rising energy prices, 40% believe the Fed must allow growth to fall below its potential level to tame inflation, and 30% think a hike should occur this meeting, with at least two voting members expected to dissent. Despite multiple shocks, respondents still forecast GDP growth of 2.4% this year and 2.2% in 2027, with the recession probability declining to 26%. 50% view government debt as the larger driver of rising bond yields, with the 10-year yield expected to remain above 5% this year. 63% consider legal challenges to election outcomes a market risk, and more than half expect Democrats to control both chambers of Congress. The greatest risks are ongoing tensions in Iran and a burst AI bubble.