Results from a survey conducted by CNBC indicate that the Federal Reserve is likely to reduce interest rates by 0.25 percentage points in its meeting this week, with expectations for two additional cuts in the next two meetings amid ongoing economic and political uncertainty.
However, the survey results, which included 38 economists, strategists, and fund managers, revealed widespread concern among participants due to the absence of official data resulting from the government shutdown, risks associated with an AI bubble, and high inflation levels, in addition to questions about the impact of political factors on the Fed’s decisions.
While 92% of participants believe the Fed will cut rates this week, only 66% think it should actually do so, while 38% oppose the move.
Eighty-four percent of participants expect an additional cut in December, and 54% anticipate a third cut in January, with a total estimated reduction of 100 basis points over the current and next year, which could bring the main interest rate to 3.2% by the end of 2026.
Regarding financial markets, approximately 80% of participants considered the valuation of AI stocks to be overestimated by more than 20% on average.
They also expect stocks to end the year at current levels, with a slight increase of about 5% in 2026, anticipating that the S&P 500 index will reach around 7,200 points, possibly 7,700 points by 2027.
As for the impact of the government shutdown, 82% of participants believed it would not have a significant effect on stocks, while 45% expected the shutdown to end this month and 34% in November. Most participants anticipated that the estimated temporary decline of 0.3% in monthly GDP would be compensated for after the government reopens.
