The latest CNBC Fed Survey reveals that 86% of respondents anticipate multiple rate hikes from the Federal Reserve, a notable increase from just 46% the previous month. This change follows a hawkish speech by Fed Chairman Kevin Warsh and ongoing inflation pressures, particularly from rising oil prices, which are expected to remain elevated due to geopolitical tensions.
Neil Dutta from Renaissance Macro Research emphasized that current data does not suggest a quick return to target inflation levels, while Kathy Bostjancic from Nationwide highlighted the risk of higher energy prices affecting broader inflation. The survey also reflects skepticism about the Fed's ability to manage supply-driven inflation through rate hikes.
Despite these inflation concerns, the growth outlook remains stable, with GDP growth projected at around 2.25% for the next two years and a 29% probability of recession. The S&P 500 is expected to hold its ground through year-end, with a forecasted rise of 8% next year.
However, analysts warn that the current economic conditions may not align with the Fed's policy rate, suggesting that either inflation must decrease or the Fed will need to implement further hikes. Additionally, Warsh's communication style has garnered positive feedback, with many respondents favoring less frequent forward guidance from the Fed.
The survey also highlights potential market risks stemming from ongoing political developments, with a plurality expecting Democrats to gain control of the House while Republicans maintain the Senate