By Indradip Ghosh

BENGALURU (Reuters) -The Federal Reserve will hike its key interest rate to a much higher peak than predicted two weeks ago and the risks are skewed towards an even higher terminal rate, according to economists polled by Reuters.

That change in expectations came after the Fed raised rates by 75 basis points last week for the third straight meeting and foresaw going higher than it had previously thought to tame inflation, which is running over four times above target.

Since then, already battered global stocks went much deeper into bear market territory - a decline of 20% or more - on fears of recession and most currencies weakened further against the multi-decade high dollar.

But that is unlikely to push the Fed to switch its policy path anytime soon as Fed Chair Jerome Powell and other policymakers have remained blunt about the "pain" to come.

Indeed, over 70% of economists, 59 of 83, predicted the central bank would hike its fed funds rate by three-quarters of a percentage point for the fourth straight meeting in November, a Reuters poll taken after the Fed meeting last week showed.

The survey predicted that would be followed by 50 basis points in December to end the year at 4.25%-4.50%.

If realized, that would be the highest rate since early 2008, before the worst of the global financial crisis, and 75 basis points higher than 3.50%-3.75% predicted just two weeks ago. The forecasts are in line with the Fed's dot-plot projection and current market pricing.

"With inflation this high, history says you need to get at it sooner and you need to follow through. The real policy mistake is not bringing inflation back down to 2%," said Michael Gapen, chief U.S. economist at BofA Securities.

"If a near-term recession and a larger increase in the unemployment rate than they are projecting are needed to bring inflation down, that is not a policy error in their mind."

A poll taken earlier this month put the probability of a U.S. recession over the coming year at 45%, with the chance of one occurring over the next two years at 55%.

NEUTRAL LEVEL

A majority, 45 of 83 economists, predicted the fed funds rate peaking at 4.50%-4.75% or higher in Q1 2023, the same as the dot plot projection and higher than the estimated neutral level of 2.4% that neither stimulates nor restricts economic activity.

All but two of 51 economists who replied to an additional question said the risks were skewed towards a higher terminal rate than they currently expected.

"The Fed reinforced their commitment to whatever it takes to get inflation under control, even if that means causing some pain in the economy," said Justin Weidner, U.S. economist at Deutsche Bank, who expects the rate to peak at 4.75%-5.00%.