Fed Raises Rates 0.25 Points to Fight Inflation Despite Trump Pushback

A majority of economists and market strategists now anticipate at least two Federal Reserve rate hikes over the next twelve months, according to the latest CNBC Fed Survey. The shift marks a sharp reversal from the prior month, when fewer than half expected any increase at all. Eighty-six percent of the 29 respondents now see hikes ahead, with over half forecasting more than one.

The change follows a hawkish address by Fed Chairman Kevin Warsh at Jackson Hole, combined with surging oil prices and inflation readings that have not moderated. Respondents cited evidence that price pressures have moved beyond energy alone. Three-quarters described the inflation challenge as broader than fuel costs, with forecasts for consumer price index growth revised upward to near 3.5 percent for the current year and 2.85 percent for 2027.

Neil Dutta of Renaissance Macro Research noted the absence of data indicating inflation would return to target without further intervention. Kathy Bostjancic of Nationwide pointed to rising oil, gasoline, and diesel prices as risks that could transmit into other sectors and lift inflation expectations. Most participants also expect the Strait of Hormuz to remain closed for at least another month, keeping energy costs elevated beyond six months.

Moody's Analytics chief economist Mark Zandi has urged restraint, arguing that a quarter-point increase at the upcoming meeting would represent a serious policy error given steady economic growth near 2 percent. Zandi observed that markets have already priced in multiple hikes and warned that the odds of a misstep are rising. The Fed's next policy meeting begins Tuesday, with Warsh more than three months into the role and focused on reducing forward guidance while adjusting internal decision processes.

Survey participants largely tied the outlook to recent price data rather than abstract forecasts. Several expressed doubt that the central bank could fully offset energy-driven inflation through rate adjustments alone, yet the prevailing view held that inaction would allow broader pressures to persist. The results reflect updated assessments based on observed inflation trends and commodity developments rather than prior expectations of a single, isolated move.