Fed Interest Rate Hike Expectation at 92%, Economists Anticipate Additional Increases by 2027

Markets expect the Fed to raise interest rates by 25 basis points this evening. According to data from the Chicago Stock Exchange, the expectation rate for a 25 basis point increase is over 92%. However, there are concerns that this increase will not be limited to a single instance. According to a CNBC survey, 86% of economists expect at least one additional increase within a year following a potential rate hike in September. About one-third predict three rate hikes within a year. In a Reuters survey, 37 out of 70 economists expect at least one rate increase by March 2027 in addition to the September hike. Bank of America analyst Stephen Juneau forecasts three increases for 2026. Barclays analyst Jonathan Millar expects a total of two increases this year. Today's Fed decision will also reveal dot-plot projections. The interest rate expectations for the end of 2026 and 2027 from the 19 members will be monitored. In the June dot-plot, the median interest rate expectation for the end of 2026 was 3.8%, and this rate is expected to be higher today. Eight out of 18 members had indicated they did not expect a rate increase in 2026; this number is expected to decrease today.

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