Reuters poll shows the Federal Reserve is expected to raise rates by 25 bps in Q4 2022

Reuters most recent poll of analysts on views on the US economy and the Federal Open Market Committee.

 

  • US GDP to grow 3.9% in 2022 and 2.6% in 2023 (vs 4.0% and 2.5% in the October poll)
  • US Core PCE price index to average 3.0% in 2022 and 2.3% in 2023 (vs 2.7% and 2.3% in October poll)
  • The Federal Reserve to raise rates by 25 basis points to 0.25-0.50% in Q4 2022 (vs Q1 2023 in October poll)

 

The moving forward of expectations of a hike is a catch up somewhat with market pricing already. This comment ( Bank of America Securities) from the Reuters report puts the ‘why’ in a nutshell:

  • “The double-whammy of a cost and wage push into prices is likely leaving the Fed uncomfortable. The risks of earlier hikes – next summer, if not before – are on the rise
  • To the extent that inflation expectations march higher over the longer run and consumers continue to react negatively to higher prices on the view that they will prove persistent, the more likely the Fed will damper the inflationary pressure with tighter monetary policy.”
Reuters most recent poll of analysts on views on the US economy and the Federal Open Market Committee.