Fed interest rates forecast

The Federal Reserve has had six meetings so far in 2023, raising rates in February, March, May, and July, while holding rates at its June and September meetings.

With the October/November Federal Open Market Committee (FOMC) meeting upon us, Finder’s panel of experts all believe the Fed will hold rates steady.

• Previous year of Fed rate changes

But what can we expect from the next meeting? Finder spoke with industry experts to find out what they think the Fed will do, with all expecting rates to hold at the October/November 2023 FOMC meeting.

What will the Fed do with interest rates at its next meeting?

The majority of panel members expect the Fed will hold rates at its next meeting. Cynthia Wylie, partner and co-founder of the Project Consultant, says with the way that the US economy is performing we shouldn’t expect to see rates start coming down until sometime next year.

The economy is still hot and GDP is still going up fueled by consumer purchases. I think the FED will hold rates steady until the first quarter of 2024 when they will decrease the rate to help the lending sector.

Investment Banker, Howard Yaruss, says that the Fed won’t raise rates for myriad reasons:
“I cannot see the Fed increasing rates since the inflation rate is almost back to its 2% target and we have student loan payments resuming, the Covid assistance waning, and the toll an unstable world takes on the economy.”

Senior analyst for digital assets at Finder, Frank Corva, also sees the Fed rate holding but says while he thinks the Fed will hold rates it should be looking to cut them.

“Holding rates higher for longer is starting to have counterproductive effects. The rate of CPI is increasing again despite the high Fed Funds rate, while the US national debt is increasing at almost $1 trillion per year as a result of the high rates.”

Cynthia Wylie

Partner and co-founder of The Project Consultant

Hold rates

The economy is still hot and GDP is still going up fueled by consumer purchases./blockquote>

• Full commentary: Cynthia Wylie

  What is your prediction regarding rates?

  The economy is still hot and GDP is still going up fueled by consumer purchases. However, many financing companies are being caught in a squeeze because the interest rates are higher now than the money they lent out previously. The commercial loan situation is a ticking time bomb. Those loans reset after typically ten years and many are coming due. Therefore, I think the FED will hold rates steady until the first quarter of 2024 when they will decrease the rate to help the lending sector.

  What SHOULD the Fed do with rates at the next meeting?

  Due to the interest squeeze on the financing/lending sector.

Howard Yaruss

Investment banker

Raise rates

I cannot see the Fed increasing rates since the inflation rate is almost back to its 2% target.

• Full commentary: Howard Yaruss

  What is your prediction regarding rates?

  I cannot see the Fed increasing rates since the inflation rate is almost back to its 2% target and we have student loan payments resuming, the Covid assistance waning, and the toll an unstable world takes on the economy.

  What SHOULD the Fed do with rates at the next meeting?

  For the same reasons I think the Fed will not increase rates.

Frank Corva

Senior analyst for digital assets and Finder.com

Raise rates

Holding rates high while the US debt to GDP ration is 130% has proven to be a dangerous endeavor.

• Full commentary: Frank Corva

  What is your prediction regarding rates?

  Holding rates higher for longer is starting to have counterproductive effects. The rate of CPI is increasing again despite the high Fed Funds rate, while the US national debt is increasing at almost $1 trillion per year as a result of the high rates.

  What SHOULD the Fed do with rates at the next meeting?

  Holding rates high while the US debt to GDP ration is 130% has proven to be a dangerous endeavor. We saw banks collapse because of a duration mismatch in bonds earlier this year, and a bigger collapse may occur if The Fed continues to keep financial conditions tight.

Looking further ahead, the majority* of the panel see the Fed holding and decreasing rates.

How much SHOULD the Fed increase or decrease rates?

60% of panelists said the Fed SHOULD hold rates at their current level.

When do you think the fed rate will peak?

The majority of the panel (67%) panel think that the Fed rate will October/November 2023, while 33% say it has already peaked.

As to what the Fed funds rate will be at it’s peak, the all members of the panel believe that 5.5% is the number.

Economic indicators

From the perspective of individual Americans, our panel has a fairly pessimistic outlook for a range of economic indicators over the next six months. The entire panel say that household debt to rise and cost of living is going to increase.

When will inflation return to 2%?

If you were hoping for the inflation rate (currently at 5.5% since the September meeting) to return to the Bank’s target range of 2% anytime soon, our panel has some bad news for you with only 67% of panelists not expecting rates to return to 2% until at least Q4 2024.

Will the US enter a recession in 2023?

The majority of the panel (67%) see a recession in the next 12 months as somewhat unlikely.

Soft economic indicators

The panel is trending fairly neutral to negative on how they feel about the future of various soft economic indicators.

Upcoming FOMC 2023 meetings

The September 19-20, 2023 FOMC meeting is the sixth FOMC meeting for 2023.

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