Federal Reserve seen skipping Oct rate hike but hiking in Dec - Reuters poll

Investing.com - The Federal Reserve is set to keep interest rates steady at the central bank's next monetary policy meeting later this month, but raise borrowing costs once again in December, according to a Reuters poll released on Tuesday.

Some 94 out of 100 economists who responded to the poll taken between October 16-20 said they expect rates to remain at a range of 3.75% to 4.00% following the October 27-28 gathering.

Meanwhile, all 100 anticipate that the Fed will increase rates at its final meeting of the year on December 8-9, Reuters said. That is up sharply from the prior poll, in which less than half of the economists predicted a December hike.

Last month, the rate-setting Federal Open Market Committee lifted borrowing costs for the first time since 2023, citing a desire to corral mounting inflationary pressures fueled by soaring energy prices.

But investors are widely wagering that the Fed will opt to skip another hike this month, even though recent price growth data for September came in hotter than anticipated.

Instead, traders have been keeping tabs on messaging from Fed officials. Fed Chair Kevin Warsh, sticking to a strategy he has adopted since taking over at the helm of the central bank earlier this year, has declined to provide any specific guidance.

Others, including San Francisco Fed President Mary Daly, have argued that while more rate increases may be needed in the future, there is currently no urgent need to hike immediately. New York Fed President John Williams and Fed Vice Chair Philip Jefferson have also expressed a preference to evaluate more economic data before pulling the trigger on a fresh rate bump.

Almost 60% of the economists polled by Reuters expect the policy rate to reach a peak of 4.00% to 4.25%, although some flagged risks that the Fed may opt to roll out more rate increases than initially thought.

(Reuters contributed reporting)

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