Fed Rate Hike Expectations Skyrocket After Strong Inflation Data

The latest inflation data from the US has caused a significant shift in expectations for a Federal Reserve interest rate hike. Following the August inflation numbers, which came in slightly above projections, almost all analysts on the list have revised their predictions to anticipate a September rate hike.

Of the 20 institutions surveyed, 16 now predict that the next move by the Fed will be an increase in interest rates in September. A few still expect rates to remain unchanged or see a rate cut in 2027.

Banks like Bank of America and RBC are among those forecasting a total of 75 basis points of increases throughout 2026. Others, such as Goldman Sachs and JPMorgan, anticipate only a 25 basis point increase for the year.

HSBC stands out as an exception to this trend, predicting that interest rates will remain stable indefinitely, with no change expected in 2026. Meanwhile, Jefferies expects the first move to be a rate cut of 25 basis points in December.