FXStreet reported Nov. 5 that TD Securities analysts expect a further 50 basis points of Federal Reserve rate hikes through Q1 2027, a forecast set against persistent inflation and a changed political backdrop.
FXStreet attributed the outlook to unnamed TD Securities analysts. It also said they see a possible end to increases after March if post-election developments bring resolution to the Iran conflict, reduced AI investment, or both. The report describes these as conditions in the analysts’ outlook. The further 50 basis points are the firm’s forecast, separate from the Fed’s October decision to leave rates unchanged.
The Associated Press reported that Democrats won control of the House and Senate in the Nov. 3 midterm elections. That result is part of the political backdrop for the forecast; the Fed’s latest policy decision came before the election.
On Oct. 28, the Federal Open Market Committee held the federal funds target range at 3.75%–4.00% in a 10-2 vote. Lisa D. Cook and Beth M. Hammack favored a 25-basis-point increase. The Fed said economic activity was expanding at a strong pace and inflation remained elevated.
The Bureau of Economic Analysis said the Personal Consumption Expenditures (PCE) price index rose 3.6% over the year and 0.5% from August in September. Excluding food and energy, prices increased 3.1% year over year and 0.3% month over month.
St. Louis Fed President Alberto Musalem called for further tightening in prepared remarks on Oct. 30, while saying other FOMC members might not share his view. EconoTimes previously reported his call for more tightening.
The FOMC’s next scheduled meeting is Dec. 8-9, alongside a Summary of Economic Projections.
