What changed between surveys
The 29-person CNBC Fed Survey of economists, fund managers, and strategists swung hard since July. Back then, fewer than half thought a hike was coming; now nearly nine in ten do, and a clear majority expect two increases over the next year. A third of respondents even see three or more moves.
Why the shift? Kevin Warsh delivered a notably hawkish speech in Jackson Hole, oil prices jumped, and inflation didn't cool. Taken together, respondents see price pressures spreading beyond the pump and not fading without help from the Fed. The Fed wraps a two-day meeting Wednesday, following its last gathering in July.
How respondents see inflation and energy
The view now is that inflation is no longer just an energy story. Roughly three quarters say the problem is broader. CPI projections were marked higher for 2026 and 2027, and the average forecast has inflation running close to 3.5% this year before easing to 2.85% in 2027.
Renaissance Macro Research's Neil Dutta, who leads economic research, didn't mince words: "There is nothing in the data that suggests inflation will return to target 'soon.'" He pointed to Fed Governor Christopher Waller's warning that "Sternly staring at inflation until it melts before our withering gaze is not an option."
Energy tensions aren't expected to fade quickly. Most respondents think the Strait of Hormuz will stay closed for at least another month and that oil prices will remain high for more than six months. As Nationwide's chief U.S. economist Kathy Bostjancic wrote, "The renewed march higher in oil, gasoline, and diesel prices adds to concerns higher energy prices could spill over to other goods and services and inflation expectations."
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Rate path, Fed credibility, and limits on policy
The tilt is toward multiple hikes ahead, but several participants flagged that rate policy can do only so much against supply-driven fuel costs. Douglas Gordon of Russell Investments, where he serves as senior portfolio manager, said it this way: "The FOMC faces a challenge in showing institutional credibility vis-a-vis the inflation piece of its mandate relative to its limited ability to impact supply-driven inflation using its rate setting tool."
Communication and independence scored fairly well for Chair Warsh. Fifty-nine percent say he has shared enough about his economic and policy views, and 66% view his policy approach as very or mostly independent, though that's down 9 points from July. Just 31% now say the Fed "talks too much,"Down from 68% in July.
Most do not want regular forward guidance (69%), but a majority would like the Fed to routinely explain its reaction function (59%). Warsh isStill seen as the key voice on the outlook and policy, followed by Governor Waller and New York Fed President John Williams. Moreover, 69% say any push from the administration to lower rates won't influence the decision scheduled for this month.
Forecasts for growth, markets and risks
Despite hotter inflation expectations, growth forecasts barely moved. Recession odds average 29% over the next year, only a bit above normal. Respondents still expect GDP of about 2.25% for both this year and next, compared with 2.1% in 2025, and they peg the unemployment rate near 4.25%. Analysts foresee equities staying about flat into year-end, and they expect the S&P 500 to reach 8,274 next year, an 8% gain.
In addition, 61% perceive some market risk stemming from continuing court fights related to the midterm elections. Politically, a 46% plurality expect Democrats to win the House while Republicans keep the Senate, and 29% think Democrats take full control of Congress.
Bottom line for your wallet: participants see stickier inflation, a tighter Fed, and an economy that keeps chugging. That mix helps explain why stock targets held up even as rate expectations rose.
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