The Federal Reserve outlook has shifted sharply more hawkish, with a majority of respondents to CNBC’s latest Fed Survey now expecting at least two rate hikes over the next year.
The supplied source says 86% of respondents expect at least one hike, up from 46% a month earlier.
Fifty-five percent expect more than a single increase, while roughly one third forecast three or more.
The change is not being driven by oil alone.
About three quarters of the survey’s 29 respondents believe the inflation problem has broadened beyond energy prices.
The average CPI forecast rose to nearly 3.5% for 2026 and 2.85% for 2027.
That is important because a temporary oil shock can sometimes be looked through by monetary policymakers.
Broader inflation in goods and services is harder to ignore.
The survey also shows that economists expect elevated oil prices to persist.
Most respondents believe the Strait of Hormuz will remain closed for at least another month and that oil prices will stay elevated for more than six months.
That increases the risk that higher energy costs feed into wages, transportation, goods and inflation expectations.
The growth outlook, however, has not deteriorated much.
Respondents put the probability of recession over the next twelve months at 29%.
GDP growth is still expected near 2.25% this year and next, while unemployment is seen around 4.25%.
That creates a difficult policy mix.
Inflation expectations are rising while growth remains resilient enough that the Fed may feel it has room to tighten.
The survey’s S&P 500 forecast is also constructive, with respondents expecting the index to hold near current levels through year-end and rise about 8% to 8,274 next year.
Those forecasts can coexist only if tighter policy cools inflation without causing a major growth break.
Views of Fed Chair Kevin Warsh remain broadly positive.
Sixty-six percent of respondents still describe monetary policy as very or mostly independent, although that figure is down nine percentage points from the prior survey.
What investors should watch: the number of hikes implied by markets, CPI breadth beyond energy, oil duration, Warsh’s reaction function, long-term Treasury yields and whether growth forecasts begin weakening as policy tightens.
BTI’s bottom line: the survey no longer points to a one-and-done hike. Markets are increasingly pricing a sustained inflation problem, but the real risk is that the Fed has to tighten enough to break the relatively stable growth outlook that investors currently expect.