Fed Rate Hike on Wednesday Now Likely, Say Economists — And at Least One More to Follow

 Fed Rate Hike on Wednesday Now Likely, Say Economists — And at Least One More to Follow

**A new Reuters poll shows a dramatic reversal. After Friday's inflation report, 86 out of 101 economists now expect the Federal Reserve to raise interest rates on Wednesday. That's 85% of them. Last week, more than two-thirds expected a hold. This is the biggest last-minute shift before a Fed meeting since September 2024. And here's the part that should get your attention: nearly 53% of economists now expect at least one more hike by the end of March.**

Let me break this down for you, because this is one of those moments where the ground shifts under your feet.

## The Poll That Changed Everything

The Reuters poll was conducted after Friday's inflation report. And the results were stunning.

**86 out of 101 economists** — that's 85% — now say the Fed will raise its benchmark rate by a quarter percentage point to **3.75%-4.00%** at its September 15-16 meeting. That would be the **first rate hike since July 2023**.

Last week, before the inflation data, more than two-thirds of economists expected the Fed to hold steady. That consensus is gone.

"The shift has been swift," Reuters reported. And it's not just a one-and-done. **37 out of 70 forecasters** — nearly 53% — now expect at least one further increase by end-March. Last week, 56% expected steady rates.

Interest rate futures are pricing close to a **90% chance** of an increase this week. And they're pricing roughly **four increases by end-July 2027**.

## Why the Sudden Change?

Three things happened, and they all pointed in the same direction.

### 1. The Inflation Report Was Firm

Friday's CPI report showed **core inflation rising 0.3% month-over-month**, above the 0.2% estimate. Headline CPI rose 0.4% for the month. And the annual rate held at **3.4%** — well above the Fed's 2% target.

But here's the detail that really mattered. Economists zeroed in on the producer price components that feed into the **Personal Consumption Expenditures price index** — the Fed's preferred inflation gauge. That gauge is already nearly **twice its 2% target**. And many economists now believe core PCE inflation actually **accelerated** in August.

### 2. Oil Is Above $100

Crude oil futures are trading well above **$100 a barrel**. Diesel prices just hit a **record high**. And the Middle East war shows no signs of ending.

Higher energy costs feed directly into inflation expectations. When oil goes up, everything that gets shipped gets more expensive. And that keeps inflation sticky.

### 3. Warsh Boxed Himself In

Fed Chair Kevin Warsh gave a hawkish speech at Jackson Hole in late August. He made it clear that the Fed has "work to do" if inflation doesn't improve. He described the 2% target as "firm and fixed."

"Warsh kind of boxed himself into where the data needed to be very soft for the Fed not to follow through with a hike," said Stephen Juneau, a senior U.S. economist at Bank of America. "We just didn't get that. Then we got this inflation report and it was firmer."

## The Big Banks Are Changing Their Forecasts

It's not just economists in a poll. The major banks are moving too.

**Goldman Sachs** shifted from expecting a hold to expecting a **September hike**.

**J.P. Morgan** now expects **two hikes** — in September and December.

**HSBC** and **Deutsche Bank** are also now forecasting a quarter-point increase.

**UBS** revised its view, expecting hikes in **September and December**, taking the federal funds rate to **4.00%-4.25%**.

**Bank of America** has been expecting **three hikes** this year since June.

## What the Fed Is Worried About

The Fed is in a tough spot. On one hand, inflation is still too high. On the other, the labor market is showing signs of cooling beneath the surface.

But here's what's really worrying them: **the 10-year Treasury yield is hovering near 5%**. That's a politically sensitive level. And despite Treasury Secretary Scott Bessent's $6 billion buyback announcement, yields haven't come down.

"The Fed's inflation-fighting credentials are on the line here," said Scott Anderson, chief U.S. economist at BMO Capital Markets. "They have to back up their hawkish rhetoric with some real action at the upcoming meeting, or they do risk a much steeper Treasury yield curve."

If the Fed doesn't hike, the bond market could punish them. Long-term yields could spike even higher. And that would make mortgages, car loans, and credit card rates even more expensive.

## The Political Pressure

Here's the awkward part. **President Trump has been publicly demanding that the Fed cut rates**, not raise them. He's threatened to halt trade with countries that run surpluses with the U.S. unless the Fed complies.

But the market doesn't think Warsh will listen. And that's probably the right call. A rate hike now would show that the Fed is willing to do what it thinks is right, regardless of political pressure.

## What This Means for You

Let me bring this down to earth. What does a Fed rate hike actually mean for your wallet?

### If You Have a Mortgage

Mortgage rates are already near **7%** — the highest in over a year. If the Fed hikes on Wednesday, they could go higher. If you've been waiting to refinance, the window is closing fast.

### If You Have Credit Card Debt

Variable rates are tied to the Fed's benchmark. A hike means your minimum payments go up. The average credit card rate is already above **23%**.

### If You're Invested in Stocks

The "good news is bad news" dynamic is back. Strong economic data raises rate hike odds, which pressures stock valuations. Growth stocks — especially tech and AI — are the most vulnerable.

### If You're Just Trying to Pay Your Bills

Gas prices are at record levels. Diesel just hit **$6 a gallon**. Grocery prices are still rising. And there's no relief in sight until the wars end and the oil supply chain normalizes.

## What Happens Next?

The Fed announces its decision on **Wednesday at 2 p.m. ET**, followed by Chair Warsh's press conference at 2:30 p.m. ET.

The decision itself is almost certain — a 25-basis-point hike. But the press conference matters just as much. How Warsh frames the decision — is this a one-off, or the start of a cycle? — will determine how markets react.

"A quarter point may be the opening move, not the final one," KPMG chief economist Diane Swonk told Reuters. "The only durable path to lower borrowing costs is to contain inflation."

That's the message. The Fed is done waiting. It's going to act. And the era of cheap money isn't coming back anytime soon.

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## Frequently Asked Questions (FAQs)

### 1. What did the Reuters poll find?

The Reuters poll, conducted after Friday's inflation report, found that **86 out of 101 economists (85%)** expect the Fed to raise rates by a quarter point to 3.75%-4.00% at its September 15-16 meeting. That's a dramatic reversal from last week, when more than two-thirds expected a hold.

### 2. How many more hikes are expected?

**37 out of 70 forecasters (nearly 53%)** expect at least one more increase by end-March. Interest rate futures are pricing roughly **four increases by end-July 2027**.

### 3. What caused the shift in expectations?

Three things: a firmer-than-expected inflation report, oil prices above $100 a barrel, and Fed Chair Warsh's hawkish Jackson Hole speech that boxed him into acting if the data didn't improve.

### 4. What did the inflation report show?

Core CPI rose **0.3% month-over-month** in August, above the 0.2% estimate. Headline CPI rose 0.4%. The annual rate held at 3.4%. Producer price components that feed into core PCE suggested inflation accelerated.

### 5. What are the big banks forecasting?

Goldman Sachs, J.P. Morgan, HSBC, and Deutsche Bank have all shifted to expecting a hike. J.P. Morgan and UBS now expect **two hikes** — in September and December. Bank of America has expected three hikes since June.

### 6. Why is the 10-year Treasury yield important?

The 10-year yield is hovering near **5%**, a politically sensitive level. If the Fed doesn't hike, the bond market could punish them by pushing yields even higher, which would raise borrowing costs across the economy.

### 7. What does a rate hike mean for me?

Higher borrowing costs for mortgages, credit cards, and auto loans. Mortgage rates are already near 7%. Credit card rates are above 23%. A hike would push those higher.

### 8. What happens on Wednesday?

The Fed announces its decision at **2 p.m. ET**, followed by Chair Warsh's press conference at **2:30 p.m. ET**. The decision is almost certain — a 25-basis-point hike. The press conference will determine how markets react.

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## Disclaimer

*This article is for informational and educational purposes only and does not constitute financial, investment, tax, or legal advice. The views expressed are based on publicly available information, including the Reuters poll and analyst commentary as of September 14, 2026. Interest rate decisions, inflation data, and market conditions are subject to rapid change. The author does not endorse any specific investment strategies or products. Past performance is not indicative of future results. Before making any financial or investment decisions based on the content of this article, please consult with qualified professionals who can evaluate your specific situation.*