After a weak first quarter and a rebound in the second, Wall Street remains convinced of a Fed rate hike in the third quarter. Respondents to the CNBC Fed Survey continue to look for the Fed’s first rate increase in nine years to take place in September.
While 92 percent see a Fed rate rise this year, up from 84 percent in the April survey, the central bank is seen hiking only modestly this year. The fed funds rate is forecast to end the year at just 53 basis points, or two quarter-point hikes. For 2016, respondents forecast a funds rate of 1.56 percent. That could mean four quarter-point increases, or a rate hike just every other meeting.
“We think the June FOMC meeting will be all about preparing the ground for a post-summer rate hike,” said Thomas Costerg, an economist at Standard Chartered Bank. “This should support our scenario that the first rate hike will be in September. A July rate hike remains unlikely, however, as the Fed probably wants to see more evidence of a Q2 GDP rebound, and more wage data.”
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