Analysts Note Fed's Slowing Pace Despite Rising Rate Expectations

Economic commentary from Mizuho Securities and Morgan Stanley highlighted shifting expectations regarding Federal Reserve policy. While 94 of 100 economists expect the Federal Reserve to keep the federal funds rate unchanged at the October 27-28 meeting, all 100 polled economists now forecast a rate hike in December. Mizuho Securities senior US economist Alex Pelle noted that despite a strong economy and hotter-than-expected inflation, the Federal Reserve is 'treading water' and may be 'getting a little behind.'

The analysis reflects a sharp reversal in economist sentiment regarding future monetary tightening, with nearly 60 percent of polled economists now expecting the policy rate to peak at higher levels. This commentary addresses the Federal Reserve's signaling of a slower approach to further rate increases despite recent economic strength and persistent inflation.