According to a Reuters poll conducted on September 9, 86 out of 101 economists anticipate that the Federal Reserve (Fed) will raise interest rates by 25 basis points to a range of 3.75%-4.00% at its meeting on September 16. This marks a significant shift in expectations compared to the previous poll, where 65 of 93 economists had predicted the Fed would hold rates steady instead of hiking them [1].
The survey also revealed that 37 of 70 economists expect the Fed to implement at least two additional rate hikes by the end of March 2027. This is an increase from the prior poll, in which only 21 of 82 economists held this view [1].
The article explains that the Fed's primary tools for achieving its dual mandate of price stability and full employment are interest rate adjustments. When inflation exceeds the Fed's 2% target, rate hikes are used to cool the economy, which typically strengthens the US Dollar by attracting international investment. Conversely, rate cuts are used to stimulate the economy when inflation is low or unemployment is high, which can weaken the US Dollar [1].
No specific market reactions or analyst opinions beyond the poll results are mentioned in the article. The article also provides background on the Fed's policy meetings and tools such as Quantitative Easing (QE) and Quantitative Tightening (QT), but does not link these directly to the current rate hike expectations [1].
CONCLUSION
A strong majority of economists now expect the Federal Reserve to raise interest rates to 3.75%-4.00% on September 16, reflecting a notable shift in market expectations. The poll also indicates growing anticipation of further rate hikes into 2027. These expectations suggest a moderately positive outlook for the US Dollar, though no immediate market reactions were reported.