Economists Agree: Fed to Hold Rates Steady This Year – Reuters Poll

A latest Reuters poll shows market expectations for rate cuts by the Federal Reserve this year have largely faded, with a vast majority of surveyed economists expecting the central bank to hold rates steady at its September meeting and maintain that stance through year-end.

**Consensus Shifts to "Holding Firm"**

According to a Reuters poll conducted from August 12-17, a vast majority of economists expect the Fed to hold rates steady in September and remain on hold for the rest of the year. This aligns with the direction of earlier surveys: in previous polls, over half of respondents already expected the benchmark rate to remain unchanged through end-September, and the share expecting no rate cut this year rose notably from the prior survey. Market expectations for the timing of the first rate cut have continued to be pushed back.

**Sticky Inflation Remains Key Constraint**

Economists generally attribute the Fed's caution to inflationary pressures driven by energy price fluctuations. The poll shows respondents are not optimistic about the pace of decline in core PCE inflation, with some forecasts suggesting inflation gauges will remain at relatively elevated levels through the year. Michael Gapen, chief US economist at Morgan Stanley, noted earlier that the main risk is the Fed will continue holding rates unchanged if inflation underperforms expectations. That logic still holds in the current survey—without clear and sustained signs of an inflation pullback, the urgency for rate cuts remains absent.

**Leadership Transition Adds Uncertainty**

Beyond inflation, the Fed's leadership transition also brings uncertainty to the policy path. Market reports indicate that the confirmation process for the Fed chair nominee is drawing widespread attention. If the transition proceeds smoothly, the new chair's proposal to run both balance sheet reduction and rate cuts concurrently could accelerate implementation; if delayed, a prolonged policy vacuum would make it harder for short-term markets to form cohesive rate-cut expectations. Against this backdrop, economists tend to believe the Fed will not easily adjust rates within the year, aiming to avoid sending ambiguous signals during the transition phase.