Economists and strategists are uncertain about the inflation outlook, the CNBC Fed Survey for December found.
Amid forecasts for somewhat higher inflation and lower unemployment than in the prior survey, 93% see a quarter-point cut coming. But only 63% believe it's what the Fed ought to do. The outlook for 2025 is for just two more quarter-point cuts, down from three in the last survey, bringing the funds rate down to 3.8% by this time next year and 3.4%, or just above the average neutral rate, by the end of 2026.One big unknown is the incoming administration's fiscal policies.
A 56% majority of respondents see the effects of policies from the incoming administration that are likely to be enacted as"somewhat inflationary" and a further 11% see them as"extremely inflationary." They are divided on the growth effects, with 41% seeing the policies as"somewhat positive" for growth and 41% viewing them as"somewhat negative."
"The economy remains surprisingly strong and the only risks on the horizon stem from potential tariffs and the possible deportation of essential, largely non-replaceable immigrant workers," wrote economist Joel Naroff.next year but increasingly see equities as overextended. From current levels, the S&P 500 is forecast to rise just 3% next year and 7% by 2026.
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