The Federal Reserve is expected to leave interest rates unchanged for the remainder of 2026, although a growing share of economists now expects at least one increase before the end of the year, according to a Reuters poll.
About 70% of respondents – 65 out of 93 economists surveyed between September 4 and 9 – forecast that the federal funds rate will remain in its current 3.50% to 3.75% range at the Fed’s meeting on September 15 and 16.
That represents a marked drop from the 90% who expected no change in August. Those forecasting a quarter-point rise believe it would be the first increase since July 2023.
Expectations for the rest of the year have also shifted. Only 56% of economists, or 52 out of 93, now expect rates to remain on hold throughout 2026, compared with 80% in recent months. The proportion anticipating at least one increase has more than doubled since last month.
The survey suggests the outlook has become less settled since Kevin Warsh became chair of the US central bank and adopted a policy of offering little guidance on its next move.
“If everything plays out as we’re expecting, then they’ll stay on hold next week. But if there’s an upside surprise on the inflation data, they’re not going to wait around. They’re likely to start a hiking cycle,” said Eli Nir, US economist at TD Securities.
Investors and policymakers will be watching the August consumer price index, due to be published by the US Bureau of Labor Statistics on Friday, September 11. Economists polled by Reuters expect consumer prices to have risen 0.4% month on month, after a 0.1% increase in July, with annual inflation holding at 3.4%.
The Federal Open Market Committee was divided at its July 28-29 meeting, when three members supported raising rates. The Fed’s official minutes also recorded that markets had begun pricing in a possible increase at the September meeting, despite survey respondents generally expecting no change this year.
Among the primary dealers that trade directly with the Federal Reserve, views are more evenly split. Eleven expect rates to remain unchanged through the year, while 10 forecast at least one increase and Jefferies expects a cut.
Higher oil prices have added to the uncertainty. Crude futures have moved back above $100 a barrel amid renewed conflict in the Middle East, increasing concerns that energy costs could keep inflation elevated and make it harder for the Fed to maintain its current stance.
Economists expect US personal consumption expenditure inflation to average 3.5% this year and 2.4% in 2027. They do not expect inflation to return to the Fed’s 2% target before 2028, while the unemployment rate is forecast to remain close to 4.1%.
