Fed seen signaling one more hike and pushing out 2024 rate cuts
The Federal Open Market Committee will keep rates steady in the 5.25% to 5.5% range at its Sept. 19-20 meeting, the survey showed, and remain there until a first cut next May – two months later than the economists’ view in July.
Policymakers are likely to forecast one additional rate hike this year in the so-called dot plot contained in their quarterly Summary of Economic Projections, as they upgrade their view of the US economic outlook.
However, the surveyed economists think the Fed won’t go ahead with a final increase.
Fed Chair Jerome Powell and his colleagues have signaled plans to pause hikes this month as they slow the tightening campaign and approach a peak in rates. Powell said last month at the Kansas City Fed’s conference in Jackson Hole, Wyoming, that the rate of inflation remained too high and central bankers were prepared to tighten more if necessary.
A robust economy is shaping the September meeting discussion.
The median committee member is likely to see economic growth this year at 2%, double the 1% forecast in June and compared with 0.4% seen in March. In addition, they are likely to forecast a hotter labor market, with the unemployment rate, now 3.8%, edging 0.1 point higher to 3.9%, or lower than the 4.1% rate seen in June and 4.5% in March.
“The most interesting element could be views on future rate hikes,” Joel Naroff, president of Naroff Economics LLC, said in a survey response.
