No one and done: The Fed will hike at least two times over the next year, according to CNBC survey

• Average CPI forecast rose to approximately 3.5% for 2026 and 2.85% for 2027, with roughly three-quarters of respondents viewing inflation as broader than just energy prices
• A third of survey participants predict three or more rate hikes, despite concerns that the Fed's rate-setting tool has limited ability to combat supply-driven inflation from oil prices
• Fed Chairman Warsh's credibility improved significantly, with only 31% now saying the Fed 'talks too much' compared to 68% in July, and 66% rating his monetary policy conduct as very or mostly independent

Summary: CNBC Fed Survey Points to Multiple Rate Hikes Ahead

Key Findings

A dramatic shift in Federal Reserve expectations has emerged, with 86% of CNBC Fed Survey respondents now forecasting at least one rate hike within the next year—up from just 46% last month. More significantly, 55% expect multiple hikes, with a third predicting three or more increases.

Inflation Outlook

Average CPI forecasts rose substantially to approximately 3.5% for 2026 and 2.85% for 2027. Roughly 75% of the 29 respondents—including economists, fund managers, and strategists—believe inflation has spread beyond energy prices, indicating a broader problem requiring Fed action.

Driving Factors

The hawkish pivot follows Fed Chairman Kevin Warsh's Jackson Hole speech, surging oil prices due to the ongoing Iran War and Strait of Hormuz closure (expected to remain shut at least another month), and persistent inflation data. Respondents cite continued high inflation, the Iran War, and elevated oil prices as top expansion risks.

Market Implications

Despite expectations for multiple rate hikes, economic forecasts remain surprisingly optimistic. GDP projections hold steady at 2.25% for 2026-2027, recession probability remains unchanged at 29%, and unemployment is expected around 4.25%. The S&P 500 is forecast to reach 8,274 next year, representing an 8% gain.

However, analysts question this compatibility. As Guy LeBas notes, "Something has to give—either inflation needs to fall or the Fed has to hike—or the long end of the U.S. yield curve will continue to sell off."

Fed Leadership

Chairman Warsh's credibility remains largely positive, with 66% viewing his monetary policy conduct as independent, though this represents a 9-point decline from the prior survey.