Fed Favors Steady Rates Through Year-End Amid Inflation Concerns

A Reuters poll of 104 economists shows that most expect the Federal Reserve to hold interest rates steady at its next meeting and through year-end. The survey, conducted August 12-17, found that nearly 80% of respondents expect no change in rates by December.

The view is supported by recent labor market and consumer data, which have shown signs of softer economic momentum. Market-implied probability of a rate hike in September has shifted toward roughly a 70% chance of no change, according to the poll.

However, several Federal Open Market Committee members have indicated that tighter policy could still be needed if inflation stays elevated. HSBC U.S. economist Ryan Wang says the latest inflation figures are broadly neutral, but recent activity data show some softening, which could push more FOMC policymakers toward a wait-and-see approach.

Economists in the poll expect Personal Consumption Expenditures inflation to average 3.5% this year and next, staying above the Fed's 2% target until at least 2028.