US Federal Reserve Chair Kevin Warsh speaks during a news conference at the William McChesney Martin Jr. Federal Reserve Board Building in Washington, DC, on Sept. 16, 2026.
Saul Loeb | AFP | Getty Images
The Federal Reserve has considerable work to do. But it’s not going to do it in October.
That’s the key finding in CNBC’s latest Fed Survey of 30 fund managers, strategists and economists, which showed that 93% expect a pause at the Fed meeting taking place this week and 76% anticipate a rate hike at its next meeting in December. And more than half say the Fed will hike next year by an average of about two rate hikes.
“Their hesitancy to raise rates is unfathomable after an extended period of monetary and fiscal generosity, with nominal GDP running 6-8%, and when the leading indicators of inflation are uniformly warm to hot,” said Richard Bernstein, global head of macro investing at Janus Henderson Investors.
A plurality of 40% say the Fed must slow growth below potential to solve the inflation problem. That compares with 27% who say the Fed does not need to slow the economy and 23% who say the Fed has to slow the economy only somewhat.
The survey, which CNBC conducts before every Fed meeting, found that 70% see the inflation problem as broader than just the rising price of energy. The U.S. crude oil benchmark 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 the current meeting, 30% said it should hike rates now. At least two Fed voters are expected by survey respondents to dissent from the decision to keep rates unchanged.
“The aggregate demand data (probably north of 7%…) and the inflation data point to the strong need to hike rates,” wrote John Ryding, chief economic advisor for Brean Capital, LLC.
Not all agree. Some are concerned with a weakening economy.
“The Iran War is intensifying, real wages are falling, interest rates are rising, and the AI-fueled stock market looks shaky,” wrote Mark Zandi, chief economist at Moody’s Analytics. “Inflation is high, but there’s little sign it is becoming entrenched. This isn’t the time for more Fed rate hikes.
Amid numerous shocks and challenges — including high inflation, expected Fed rate hikes and a continuation of high oil prices — respondents still see economic growth remaining above potential, or the level of growth that doesn’t lead to inflation or deflation. Forecasts of GDP for this year rose to 2.4%. They ticked down slightly since the last survey but still hover above potential at 2.2% for 2027. Growth in 2025 came in at 2.05%.
Respondents in aggregate put the risk of the U.S. entering a recession in the next year at 26%, down from 29% in the last survey.
The outlook for the S&P 500 stayed stable for this year at around 7,600 but moved down to 8,033 for next year from 8,274 in the prior survey. The index closed at 7,676 Monday.
Unemployment is forecast to remain steady at 4.2% through the remainder of the year but rise to 4.4% in 2027. The Consumer Price Index is seen ticking down to 3.6% from the current pace of 3.7% in September but fall meaningfully next year to 2.6%.
The biggest risks: a continuation of the Iran war and the bursting of the artificial-intelligence bubble.
“Fed Chair Warsh, in all of his future conversations with President Trump, need to repeat this mantra: the quickest way to bring down inflation in the U.S. is to end tariffs and end the war in Iran,” said Rob Morgan, senior vice president and market strategist at MOSAIC.
When it comes to high bond yields, respondents in almost equal percentages say the culprits are high inflation, high growth, large amounts of debt issuance and expectations for a higher Fed funds rate. Asked specifically about which supply was the bigger source of the problem, 50% said government debt and 13% said debt to fund the AI buildout. But a third said both had contributed equally to the rise in yields.
On average, respondents see the 10-year yield remaining above 5% this year and dropping slightly to 4.8% in 2027
“With stubborn inflation amid energy and trade pressures… benchmark U.S. Treasury bond yields above 5% represent a new band, not an anomaly,” wrote Subodh Kumar, president, Subodh Kumar & Associates.
The congressional election is also seen as a market risk: 63% say there is some market risk from legal challenges that could extend uncertainty over which party controls congress.
“The potential for prolonged election uncertainty is one of the largest near-term risks to the markets, and we all know how much markets hate uncertainty,” said John Donaldson, director of fixed income at Haverford Trust Co.
More than half of respondents say the most likely outcome of next week’s congressional election is Democratic control of both houses, up from 29% in the last survey. Forty percent believe the Democrats will end up with control of the House but not the Senate.
Most see little change coming to individual or corporate taxes as a result of the election, but 41% expect higher deficits. However, that worry is not linked to which party is expected to control Congress. Individual growth forecasts also differed little based on which party the respondents thought would control Congress.
