Fed likely to hold rates steady in rest of 2026: Report

The majority of economists surveyed in a Reuters poll said the US Federal Reserve will likely hold its interest rate steady at its September 15-16 meeting and for the rest of this year, defying market expectations for a series of hikes.

About 70% of economists, 65 of 93, in the September 4-9 Reuters poll expect the federal funds rate to remain in the 3.50%-3.75% range next week. That reading is down from 90% in August. The rest expect a quarter-percentage-point increase.

Meanwhile, 56% of economists, 52 of 93, predict rates will remain on hold for the whole year, down from 80% in recent months. The rest expect at least one hike, more than double the share last month.

"If everything plays out as we're expecting, then they'll stay on hold next week. But if there's an upside surprise on the inflation data, they're not going to wait around. ⁠They're likely to start a hiking cycle," said Eli Nir, US economist at TD Securities.

What does this mean? The decline in the consensus among economists expecting interest rates to remain unchanged reflects the sensitivity of rate expectations to inflation data and oil prices. If August inflation data comes in above expectations, the likelihood of rates remaining unchanged could diminish.