The Federal Reserve is expected to hike interest rates by fifty basis points in September amid growing recession concerns, according to economists in a new Reuters poll.

“Most economists … predicted a half percentage point hike next month, the same as in the last poll, which would take the key interest rate to 2.75%-3.00%,” the news agency wrote. “Eighteen of the 94 surveyed expected the Fed to go for 75 basis points.”

Late last month, the Federal Reserve raised its key short-term rate by three-quarters of a percentage point for a second straight month. The unanimously approved rate hike put the federal funds rate at a range of 2.25 percent to 2.5 percent, the highest level seen since December 2018.

In its post-meeting statement, the rate-setting Federal Open Market Committee noted that “inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures.”

“Stubborn inflation continues to pose the single biggest threat to the economy. Inflation may not fall according to plan. In this event, policy rates would need to be much more restrictive, somewhere in the 4 percent to 5 percent range,” Sal Guatieri, senior economist at BMO Capital Markets, told Reuters.

“If so, there won't be much debate about whether the economy can avoid a deep downturn,” he continued.

Late last week, San Francisco Federal Reserve president Mary Daly contended that increasing interest rates by either half or three-quarters of a percentage point in September would be a “reasonable” way to further tame inflationary pressures. Additionally, she doesn’t see the Fed easing rate hikes anytime soon.

“We have a lot of work to do at the Fed to bring us back to price stability,” Daly said, per CNN Business.

“There is a lack of understanding in the markets, but consumers seem to understand. They depend on the Fed to not introduce unnecessary volatility. The worst thing you can have as a business or a consumer is to have rates go rapidly up and then come down. ... It just causes a lot of caution and uncertainty,” she added.

Meanwhile, per Fox Business, JPMorgan strategists are expecting the Fed to deliver another substantial interest rate hike next month, but that could be the last of such moves as growth begins to slow.

“We expect another outsized Fed hike in September, but post that we would look for the Fed not to surprise the markets on the hawkish side again,” the bank said in an analyst note on Monday.

Ethen Kim Lieser is a Washington state-based Finance and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.

Image: Reuters.