Reuters Poll: Fed December Rate Hike Expectations Firm, but Debate Over End of Tightening Cycle Persists

November 10 - A Reuters survey shows that about 55% of surveyed economists, or 56 out of 101, expect a December rate hike to mark the end of this tightening cycle, a proportion basically unchanged from last month.

However, 45 economists still expect the Federal Reserve to raise rates at least twice more, including more than half of the surveyed primary dealers, consistent with market pricing expectations, and believe that the risks to the inflation outlook have not changed since the U.S. midterm elections. Changes in the political landscape are unlikely to quickly ease inflation pressures. Although the market hopes for a resolution to the nearly 9-month-old Middle East conflict, driving crude oil futures prices down more than 22% from their late October highs, inflation pressures remain. A strong job market, resilient economic growth, and inflation persistently above the Fed's 2% target for nearly six years all indicate that further monetary policy tightening is still necessary.

Tom Porcelli, chief economist at Wells Fargo, said: "The Fed's decisions depend on upcoming inflation data, and these data will prompt it to raise rates again. In fact, the Fed has every reason to raise rates at the October meeting."