Major Brokerages Forecast Federal Reserve Rate Hike in December
Citigroup and other major financial institutions expect the Federal Reserve to raise interest rates in December following accelerated US consumer inflation data.
Major global brokerages and financial analysts expect the Federal Reserve System to raise interest rates in December 2026. Citigroup, Goldman Sachs, and J.P. Morgan forecast a single 25 basis point increase, which would bring the federal funds rate to 4.00%-4.25%. BofA Global Research is an outlier, predicting two hikes—one in October and one in December—totaling 50 basis points.
This shift in expectations follows September data showing US consumer prices rose 3.7% year-over-year, with a single-month jump of 0.6%. Core inflation, excluding food and energy, climbed to 2.6%, suggesting price pressures are broadening. Market futures currently reflect this sentiment, with CME FedWatch data indicating an 89.5% probability of a December move.
Nigel Green, CEO of deVere Group, suggests the central bank will likely avoid a hike during the October 27-28 meeting to avoid accusations of influencing the November 3 midterm elections. Green argues that weak September jobs data, which saw only 29,000 jobs added, provides the necessary justification for the Fed to hold rates steady in October before implementing a December increase to maintain credibility against climbing inflation.
