Fed to hold rates until at least July 2015, says slim majority: Reuters poll

Wed Apr 9, 2014 1:34pm EDT
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By Deepti Govind

(Reuters) - The U.S. Federal Reserve will not raise its key interest rate until at least July next year as it waits for the world's biggest economy to gather pace, according to a slim majority of economists in a Reuters poll.

Results of the survey of 69 economists based in the United States, Europe and Canada were similar to those in a poll of 18 primary dealers -- the banks that do business directly with the Fed -- conducted on Friday. <FED/R>

While 33 of the 69 economists in Wednesday's poll expect the bank to hike the Fed funds rate from the current 0-0.25 percent by the end of June 2015, 31 expect it to happen in the second half of that year and five said it would be early 2016.

Around two-thirds of the economists said the Fed's first move would be to 0.5 percent while the remainder said the Fed would first eliminate the current 0-0.25 percent range and then move up. Only six forecasters in Wednesday's poll said the Fed would tighten in the first quarter of next year.

In a January poll, 22 of 72 respondents said the Fed would raise the fed funds rate by mid-2015, with most predicting a hike in the second half.

Following the Fed's March policy meeting, Chair Janet Yellen hinted the central bank will probably end its massive bond-buying program next fall and could start raising interest rates around six months later.

Recent economic data releases - from a pickup in factory activity and consumer confidence to a robust pace of hiring - have given the strongest signals yet the economy was breaking free of the winter doldrums.

Not everyone is convinced solid evidence the job market is back on track after a disappointing February, although some feel the Fed may be more compelled to raise rates in the first half of next year rather than waiting.   Continued...

A general view of the U.S. Federal Reserve building as the morning sky breaks over Washington, July 31, 2013. REUTERS/Jonathan Ernst