Reuters poll: 94 of 100 economists expect U.S. rates to hold in October

Key Facts

Ninety-four of 100 economists polled by Reuters expect the U.S. interest-rate range to remain at 3.75%-4.00% at the Federal Reserve’s October 27-28 meeting, according to a poll conducted from October 16 to 20. By contrast, all 100 respondents forecast a rate hike in December, a sharp shift from the previous month’s poll, in which fewer than half expected an increase. The forecasts put the policy path after the October meeting in focus, while a hold this week remains the prevailing view among economists. They are respondents’ forecasts, however, and do not represent a decision by the central bank. The Fed raised its target range by a quarter percentage point on September 16 to 3.75%-4.00%, in a decision approved by a 12-0 vote.

December forecasts reflect differing views of the subsequent path: about 60% of economists who estimated the peak said rates would reach a range of 4.00%-4.25%. Thirty-eight of 92 respondents expected at least two further increases, indicating that estimates of the peak rate do not all converge on the same range. In the minutes of its September meeting, the Fed said economic activity was expanding at a solid pace and inflation remained elevated. The minutes also showed that participants saw inflation as still elevated and said progress in bringing it down in recent months had been insufficient. Fed staff attributed inflation remaining above its level a year earlier, in part, to higher energy costs and input costs linked to geopolitical developments, as well as prices of consumer goods associated with the buildout of artificial intelligence.

Recent price data show persistent pressures: the U.S. Consumer Price Index rose 0.6% in September from a month earlier, after a 0.4% increase in August, and was up 3.7% year over year. The gasoline index jumped 9.1% in September. Fed staff estimated headline personal consumption expenditures inflation at 3.8% in August and core inflation at 3.4%. Economists forecast annual PCE inflation of 3.7% in September, compared with August’s 3.4% reading. The September report was scheduled for release on October 29, while this estimate remains a forecast ahead of the report.

The Bureau of Economic Analysis is due to release its advance estimate of third-quarter GDP growth on October 29. The latest available reading in the evidence points to U.S. economic growth at an annualized rate of 2.2% in the second quarter, according to the third estimate, compared with 2.5% in the first quarter, according to the revised rate. October 29 brings both the PCE report and the initial growth estimate, following the conclusion of the Fed meeting. The week of October 26 also includes the committee meeting and inflation and GDP data, alongside results from major companies such as Alphabet and Amazon. Minutes of the October meeting will be published on November 18, ahead of the committee’s next meeting on December 8-9.

Bitcoin traded in October within a range centered around $80,000 since late August, with marked divergence between sessions in the previous week. On October 19, it rose as much as 2.7% and briefly moved back above $83,000. It then fell as much as 4.5% on October 22 to about $81,300, as cryptocurrencies came under pressure amid a decline in global markets, according to Bloomberg. EL7 data showed a close of $81,938.40 on October 19, $84,093.42 on October 21 and $81,416.09 on October 22. It continued to close at $80,888.16 on October 24 and $80,154.09 on October 25, before rising to $80,388.28 on October 26.

In trading on October 26, Bitcoin fell as much as 1.4% to below $79,300 before paring some losses and trading near $80,000, according to Bloomberg via Yahoo Finance. The drop coincided with a broader market decline, as investors questioned heavy spending on artificial intelligence and awaited results from major technology companies. Investors withdrew $772.4 million from U.S.-listed spot Bitcoin funds on Thursday and Friday, after net inflows of more than $1 billion earlier in the week. EL7 data show a close of $80,388.28 on October 26, after a close of $80,154.09 the previous day. The next milestones to watch are the October 29 data, publication of the October meeting minutes on November 18, and the Fed’s next meeting on December 8-9.