Chances the U.S. Federal Reserve will raise interest rates in December have shot up in the past month, according to a Reuters poll that showed economists are more convinced a move is on its way despite weak inflation and wage growth.
Several Fed officials have recently suggested the economy is nearly ready for higher rates, raising expectations for a September hike, but Fed Governor Lael Brainard surprised many with a cautious approach in a speech earlier this week.
Still, the consensus view from over 100 economists polled by Reuters in the past week showed the fed funds target rate will rise to 0.50-0.75 percent in the fourth quarter, with a median 70 percent probability of a December move.
In last month’s poll the probability was 57.5 percent. Markets are pricing the chances at under 40 percent.
That would mark a year since the Fed last raised rates and underscores the trouble it has had in hiking even once, against initial estimates it made in December of four increases this year.