The Fed is now expected to keep raising rates then hold them there, CNBC survey shows - CNBC

Wall Street finally looks to be embracing the idea that the Federal Reserve will hike rates into restrictive territory and stay at that high rate for a substantial period.

The September CNBC Fed Survey shows the average respondent believes the Fed will hike 0.75 percentage point, or 75 basis points, at Wednesday's meeting, bringing the federal funds rate to 3.1%.

The new peak rate forecast represents a 43 basis point increase from the July survey.

Respondents on average forecast the Fed will remain at that peak rate for nearly 11 months, reflecting a range of view of those who say the Fed will maintain its peak rate for as little as three months to those who say it will hold there for up to two years.

"All the Fed has to do to enjoy a soft landing is stand down after raising the funds rate to 3.25%, allow real GDP growth to remain positive, and take all the credit as inflation declines while real growth persists," Paulsen wrote.

Respondents marked down their average 2022 outlook for the S&P 500 for the sixth straight survey.

During the pandemic, at least 70% of respondents said stock prices were too high in nearly every survey.

economy is seen running at stall speed this year and next with just 0.5% growth forecast in 2022 and little improvement expected for 2023 where the average GDP forecast is just 1.1%.