Major brokerages expect next Fed rate hike in December
Oct 1 (Reuters) - Global brokerages now largely expect the US Federal Reserve to deliver at least one more interest-rate hike this year, with a growing number shifting their forecasts to a December move after softer-than-expected inflation data reduced expectations of imminent policy tightening.
Goldman Sachs joined global peers and said it expects the central bank to hike in December again. It previously forecast a 25 basis-point hike in October.
Data on Wednesday showed that the personal consumption expenditures price index increased 3.4% on an annual basis in August, below the 3.7% estimate of economists polled by Reuters.
Rate futures markets now reflect about a 38% probability of a follow-up quarter-percentage-point rate hike in October, according to CME Group's FedWatch Tool, down from nearly 71% a week ago.
After delivering a rate hike in September, the central bank is set to meet again on October 27 and 28 for its next policy meeting.
Here are the forecasts from major brokerages for 2026:
Brokerage | Total hikes in 2026 | No. of hikes in 2026 | Fed funds rate |
BofA Global Research | 50 bps of hikes | 2 (October and December) | 4.25%-4.50% |
Goldman Sachs | 25 bp rate hike | 1 (December) | 4.00%-4.25% |
J.P.Morgan | 25 bp rate hike | 1 (December) | 4.00%-4.25% |
Nomura | 25 bp rate hike | 1 (December) | 4.00%-4.25% |
HSBC | 25 bp rate hike | 1 (December) | 4.00%-4.25% |
Barclays | 25 bp rate hike | 1 (December) | 4.00%-4.25% |
Deutsche Bank | 25 bp rate hike | 1 (December) | 4.00%-4.25% |
UBS Global Wealth Management | 25 bp rate hike | 1 (December) | 4.00%-4.25% |
UBS Global Research | 25 bp rate hike | 1 (December) | 4.00%-4.25% |
Morgan Stanley | 25 bp rate hike | 1 (December) | 4.00%-4.25% |
Macquarie | 25 bp rate hike | 1 (December) | 4.00%-4.25% |
BNP Paribas | 25 bp rate hike | 1 (December) | 4.00%-4.25% |
Standard Chartered | 25 bp rate hike | 1 (December) | 4.00%-4.25% |
Citigroup | No policy change | _ | 3.75%-4.00% |