Fed Expected to Hold Rates in October, Then Hike in December, Reuters Poll Finds

The Federal Reserve will almost certainly leave interest rates unchanged at its October 27–28 meeting — and then raise them in December. That is the near-unanimous conclusion of a Reuters poll of 100 economists conducted between October 16 and 20, in which 94 forecasters expect the federal funds rate to stay in its current 3.75% to 4.00% range next week, while all 100 expect a quarter-point increase in December.

A sharp shift in expectations

The December consensus is a dramatic reversal: fewer than half of economists predicted a year-end hike in last month’s survey. What changed is the persistence of inflation, which has now run above the Fed’s 2% target for nearly six years. Poll medians suggest the Fed’s preferred price gauge will remain more than a full percentage point above target for several more quarters and may not return to 2% until at least 2028. Higher energy costs, with oil holding above $100 a barrel, and new tariffs on imported goods have added to the pressure.

What it means for households

The FOMC already raised rates by 25 basis points in September, its first increase since 2023, in a unanimous vote. A further December hike would keep mortgage rates, credit card borrowing costs and business loan rates elevated well into 2027 — a direct squeeze on households hoping for relief. Nearly 60% of the economists polled see the policy rate peaking between 4.00% and 4.25%, while a growing minority expects at least two more increases. With the October meeting falling just days before the November midterm elections, Chair Kevin Warsh — who has pointedly declined to give guidance — is saying little. For borrowers and investors alike, December is now the date that matters.

Source: Reuters via SRN News