Reuters poll: All respondents expect a December Fed rate hike of 25 basis points

Expectations for a December rate hike are unanimous among economists surveyed by Reuters: all 101 respondents in its 6–10 November poll anticipate that the Federal Reserve (Fed) will increase interest rates by 25 basis points on 9 December, lifting the target range to 4.00%-4.25%.

Views diverge, however, on the policy path beyond December. A narrow majority of 56 out of 101 economists believes that the increase will end the current tightening cycle. At least two further hikes after December are expected by the remaining 45 respondents, a group that includes more than half of the primary dealers polled.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

On a separate question, the midterm elections had not altered the medium-term inflation risk outlook for 29 of 37 economists.

Even if inflation eased in October, Fed Governor Christopher Waller said on Tuesday that he would “still support a 25 basis point increase” in December. If monthly core CPI registers around 0.3% or more, however, “a stronger policy move may be needed”, he added, arguing that the Fed should consider a half-point increase in that scenario.

A return to the Fed’s 2% inflation target was not expected before 2028, according to the poll’s median forecasts for the Personal Consumption Expenditures (PCE) Price Index. Inflation on this measure was projected to stay above 3% in the coming quarters. Average PCE inflation forecasts stood at 3.5% for 2026 and 2.6% for 2027, both marginally higher than the estimates a month earlier.

US economic growth was projected to slow from 3.4% in the third quarter to an annualised 2.2% in the fourth quarter. For the full year, economists marginally increased their growth estimates to 2.4% for 2026 and 2.2% for 2027.

Key Questions About the Fed

How does the Federal Reserve’s role affect the US Dollar?

Responsibility for US monetary policy rests with the Federal Reserve (Fed), whose twin mandates are price stability and full employment. Adjusting interest rates is its main means of pursuing these objectives. If prices climb too rapidly and inflation exceeds the Fed’s 2% target, the central bank increases interest rates. Borrowing then becomes more expensive across the economy, while the US becomes a more attractive destination for international investors’ funds, strengthening the US Dollar (USD). Conversely, inflation below 2% or an excessively high unemployment rate may prompt the Fed to cut rates. By encouraging borrowing, such cuts put pressure on the Greenback.

What is the Fed’s monetary policy meeting schedule?

At eight policy meetings each year, the Federal Open Market Committee (FOMC) reviews economic conditions and decides on monetary policy for the Federal Reserve (Fed). Twelve Fed officials attend these meetings: all seven Board of Governors members, the president of the Federal Reserve Bank of New York and four presidents from the other eleven regional Reserve Banks. Those four positions rotate, with each president serving a one-year term.

How does Quantitative Easing (QE) work, and what does it mean for USD?

When conditions become extreme, the Federal Reserve may turn to Quantitative Easing (QE) to sharply expand credit flows through a stalled financial system. This unconventional policy is deployed during crises or periods of exceptionally low inflation. During the Great Financial Crisis in 2008, it was the Fed’s preferred policy tool. Under QE, the Fed prints additional Dollars to purchase high-grade bonds from financial institutions, a process that generally weakens the US Dollar.

Why does Quantitative Tightening (QT) usually support the US Dollar?

Usually supportive of the US Dollar’s value, Quantitative Tightening (QT) reverses QE. Under this process, the Federal Reserve ceases bond purchases from financial institutions and, as bonds in its portfolio mature, does not reinvest the principal in new bonds.