Fed expected to hold rates through Powell's term amid strong growth

A Reuters poll of 100 economists found most expect the Fed to keep its policy rate at 3.50–3.75% at the Jan. 27-28 meeting and to hold through March or possibly until Chair Jerome Powell's term ends in May. The poll cites strong U.S. growth and inflation remaining above the Fed's 2% target as reasons against near-term cuts.

The Reuters poll shows a clear shift in expectations for U.S. interest-rate policy this month. All 100 surveyed economists expect the Fed to keep rates at 3.50–3.75% at its Jan. 27-28 meeting. Many now see no change through this quarter and some expect that the pause could continue until Chair Jerome Powell's term ends in May. The change reflects stronger growth and inflation that remains above the Fed's 2% goal. Key points: - All 100 economists in the Jan. 16-21 poll expect rates to remain at 3.50–3.75% at the Jan. 27-28 meeting. - 58 of 100 respondents forecast no rate change this quarter, a shift from last month's poll that expected at least one cut by March. - A slight majority (55 of 100) expect rate cuts to resume after Powell's term ends in May. - The poll's median forecast upgraded U.S. GDP growth to 2.3% for this year, up from 2.2% last year and from 2.0% predicted last month. - The Personal Consumption Expenditures index is expected to stay above the Fed's 2% target through this year and average above it through 2028, according to the poll. - The unemployment rate is expected to average 4.5% this year. Summary: The poll suggests policymakers are likely to keep policy on hold at the upcoming Fed meeting and possibly through Powell's remaining months, reflecting robust growth and persistent inflation. Political tensions and reported legal scrutiny of Fed officials are also noted in the coverage, and choices about the next chair could influence the timing of any rate cuts later in the year.