Powell Seen Slowing Fed’s Hikes After 75 Basis Points Next Week

Federal Reserve Chair Jerome Powell is likely to slow the pace of interest-rate increases after front-loading policy with a second straight 75 basis-point hike next week, economists surveyed by Bloomberg said.

They expect the Federal Open Market Committee to lift rates by a half percentage point in September, then shift to quarter-point hikes at the remaining two meetings of the year. That would lift the upper range of the central bank’s policy target to 3.5% by the end of 2022, the highest level since early 2008.

For the September meeting, the survey is slightly more dovish than interest-rate futures in financial markets, which are currently pricing in above a 50% chance of a 75 basis-point increase, assuming a 75 basis-point move next week. But the broader path envisioned by economists is slightly more hawkish than the one implied by market pricing.

It’s also steeper than what was expected prior to the June meeting, when the FOMC forecast rates rising to 3.4% at year’s end and 3.8% in 2023.