This brings the majority of private-sector forecasters in line with the central bank’s own projections and rhetoric, leaving financial market traders alone in clinging on to hopes rates will start falling later this year.
Thanks to much stronger than expected U.S. jobs data earlier this month, Fed policymakers, including Fed chair Jerome Powell, have reiterated a higher-for-longer mantra that market traders have been fighting for months.
With inflation still at more than twice the Fed’s 2.0% target, 46 of 86 economists in the Feb. 8-13 Reuters poll predicted the U.S. central bank will go for two more 25 basis point hikes, in March and May, not just March.
That would mean a peak of 5.00%-5.25%, 25 basis points higher than what the majority had been predicting since November. All 37 who replied to an extra question said the bigger risk was the fed funds rate would peak even higher.
“We currently expect two more hikes…But the risk is towards higher…