CNBC Fed Survey: Economists Expect No Rate Hikes, Foresee Cuts Amid Recession Fears

Fed Meeting and Rate Expectations

• 🎯 77% of respondents in the CNBC Fed Survey agree with the Federal Reserve keeping interest rates unchanged in the current meeting.
• 💡 While no immediate action is expected, forecasts indicate a decline in the federal funds rate from 4.33% to 3.36% by the end of next year.

Economic Outlook: Inflation and Recession Concerns

• 📈 Survey respondents anticipate higher inflation but also increased concern about a potential recession, with a 53% probability.
• ⚠️ This probability of recession is up 30 points since January, marking the largest two-survey increase since 2022.
• 📉 In scenarios of higher prices from tariffs and weaker growth, 65% of respondents believe the Fed will cut rates, a significant increase from previous surveys.

Growth and Unemployment Forecasts

• 📊 The economic growth outlook for 2024 is an anemic 0.8%, expected to bounce back to 2% next year, potentially aided by Fed rate cuts.
• ⚠️ The unemployment rate is projected to increase by half a point to 4.7% and remain at 4.6% in 2026.

Timing of Rate Cuts

• 🗓️ The survey suggests the first rate cut is not fully forecast until July, with a second expected in September, indicating the Fed is not seen acting preemptively.
• 📉 This aligns with futures market probabilities, which show a 30% chance of a June cut but a 77% chance in July.

Impact of Economic Data

• ⚡ The employment report from the previous Friday is considered a game-changer, causing probabilities of rate cuts to decline due to a stronger jobs number.
• 📌 The current economic situation shows decent momentum, with no widespread layoffs at large companies reported, though hiring is also subdued.