The U.S. Federal Reserve will raise interest rates by 50 basis points in September amid expectations of a peak in inflation but also escalating concerns about an economic downturn, economists in a Reuters poll estimated, who argued that the risks to the economy point towards a higher peak of inflationary pressures.
Inflation is still hovering around a 40-year high, despite slowing last month, leading the Fed to fund futures by forecasting a 50 basis point rate hike in September after hikes by 75 basis points in June and July.
Most economists polled by Reuters (Aug. 16-19) forecast a half-percentage-point rise in interest rates next month, the same forecast as in the last poll, raising the key interest rate at 2.75%-3%.
Eighteen of the 94 economists polled expect the Fed to raise interest rates by 75 basis points.
Last month, Fed Chairman Jerome Powell said that “it may be necessary to slow the pace of some hikes.”
The overall increase of 225 basis points since March, as well as the possibility of further interest rate hikes, brought the possibility of an economic recession closer, while the poll recorded an average probability of 45% for economic recessionary conditions to prevail during the next year. against the same estimate of a 40% chance in July and a 50% chance of a recession within two years.
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