Fed Expected to Hike Rates Twice Over Next Year Amid Inflation Concerns

The Federal Reserve is expected to raise interest rates at least twice over the next year, according to a recent CNBC survey of economists and strategists. This shift in expectations comes after Fed Chairman Kevin Warsh's hawkish speech at the Jackson Hole Economic Policy Symposium, where he emphasized the need for action on inflation. The survey found that 86% of respondents now expect a rate hike ahead, with 55% anticipating more than one increase.

Respondents cited several factors contributing to their expectations, including the recent surge in oil prices and concerns about inflation spreading beyond energy costs. Many experts believe that the Fed's efforts to combat inflation through rate hikes may be hindered by its limited ability to impact supply-driven inflation using monetary policy tools. Some economists also expressed skepticism about the effectiveness of rate hikes in addressing fuel-driven inflation.

The survey results suggest a stark change from last month, when just 46% of respondents expected a rate hike ahead. However, forecasts for growth and unemployment remain relatively unchanged, with an average probability of recession estimated at 29% over the next 12 months. The S&P 500 is forecast to maintain its current level through year-end and rise 8% to 8,274 in 2027.