US Federal Reserve Chairman Kevin Warsh said during a press conference at the Federal Reserve Board Building William McChesney Martin Jr. in Washington, DC, on September 16, 2026.
Saul Loeb AFP Getty Images
The Federal Reserve has a job to do. But that won’t happen in October.
This is the key finding in CNBC’s latest Fed Survey of 30 fund managers, strategists and economists, which shows that 93% expect a pause at this week’s Fed meeting and 76% expect a rate hike at the next meeting in December. And more than half say the Fed will hike next year by an average of about two rate hikes.
“The hesitancy to raise rates cannot be found after a long period of monetary and fiscal, with nominal GDP running at 6-8%, and when the main indicator of uniform inflation is heating up,” said Richard Bernstein, head of global macro investment at Janus Henderson Investors.
A plurality of 40% said the Fed should slow growth below the potential to solve the problem of inflation. That compares with 27% who say the Fed does not need to slow the economy and 23% who say the Fed should slow the economy.
The survey, conducted by CNBC before each Fed meeting, found that 70% see inflation as a broader problem than rising energy prices. Benchmark US crude oil is forecast to be at $88 a barrel six months from now, up from $82 in the September survey, but below the current level of $101.
Asked what the Fed should do at today’s meeting, 30% said it should raise rates now. At least two Fed voters were expected by survey respondents to disagree with the decision to keep rates unchanged.
“Aggregate demand data (probably north of 7%…) and inflation data point to a strong need to raise rates,” wrote John Ryding, chief economic advisor at Brean Capital, LLC.
Not everyone agrees. Some are concerned with the weakening economy.
“The Iran war is intensifying, real wages are falling, interest rates are rising, and the AI-powered stock market is looking shaky,” wrote Mark Zandi, chief economist at Moody’s Analytics. “Inflation is high, but there are no signs of settling down. This is not the time for Fed rate hikes.
In the midst of many surprises and challenges – including high inflation, the Fed’s expected rate hike and the continuation of high oil prices – respondents still see economic growth that is still above potential, or a growth rate that does not cause inflation or deflation. The GDP forecast for this year has increased to 2.4%. They have decreased slightly since the last survey but are still above the potential at 2.2% for 2027. Growth in 2025 comes at 2.05%.
Respondents in the aggregate put the risk of the US entering a recession in the next year at 26%, down from 29% in the last survey.
The outlook for the S&P 500 remained stable for this year at around 7,600 but fell to 8,033 for next year from 8,274 in the previous survey. The index closed at 7,676 on Monday.
Unemployment is forecast to remain steady at 4.2% through the rest of the year but rise to 4.4% in 2027. The Consumer Price Index is seen falling to 3.6% from the current pace of 3.7% in September but will fall significantly next year to 2.6%.
The biggest risk: the continuation of the Iran war and the bursting of the artificial intelligence bubble.
“Fed Chair Warsh, in all future conversations with President Trump, should repeat this mantra: the fastest way to reduce inflation in the US is to stop tariffs and stop the war in Iran,” said Rob Morgan, senior vice president and market strategist at MOSAIC.
When it comes to high bond yields, respondents with almost equal percentages say that the causes are high inflation, high growth, large debt issuance and expectations for higher Fed funds rates. Asked specifically about supply which was a bigger source of problems, 50% said government debt and 13% said debt to fund AI development. But the third said both have contributed equally to the rise in the harvest.
On average, respondents see the 10-year yield remaining above 5% this year and falling slightly to 4.8% in 2027
“With stubborn inflation amid energy and trade pressures … benchmark US Treasury bond yields above 5% represent a new band, not an anomaly,” wrote Subodh Kumar, president, Subodh Kumar & Associates.
Congressional elections are also seen as a market risk: 63% say there is some market risk from legal challenges that could increase uncertainty about which party controls congress.
“The potential for prolonged election uncertainty is one of the most near-term risks for the market, and we all know how much the market hates uncertainty,” said John Donaldson, director of fixed income at Haverford Trust Co.
More than half of respondents said the most likely outcome of next week’s congressional elections would be Democratic control of both houses, up from 29% in the last survey. Forty percent believe Democrats will end up with control of the House but not the Senate.
Most see little change to individual or corporate taxes as a result of the election, but 41% expect a higher deficit. However, these concerns are not related to which party will control the Congress. Individual growth estimates also differed based on which party respondents thought would control Congress.