Reuters Economist Poll Shows Fed to Raise Rates 2 Times in 2016

The U.S. Federal Reserve will raise interest rates twice this year, most likely in June, but the probability has faded on signs of a weak start to the year, inflation that is still tame and a brittle global backdrop, a Reuters poll showed.

The Fed is likely to take a pass at its policy meeting later in April and instead will opt to raise the federal funds rate by 25 basis points in June to 0.50-0.75 percent in what will be the second in its first series of rate rises in nearly a decade.

The central bank is still expected to follow up with another rate rise before year-end, taking the federal funds rate to 0.75-1.0 percent. But confidence among economists for two rate hikes this year, as the Fed has suggested it will do, is fading.

A growing minority of economists in the regular monthly survey, about a quarter, predict just one rate hike this year, up from 15 percent in a poll taken just one month ago.

Fed Chair Janet Yellen has made it clear she is in no hurry to raise, which has halted a dollar rally in its tracks and sent it sliding against a basket of currencies, such as the euro and the Japanese yen.

Two-thirds of economists, 54 of 81, forecast a rate hike by end-June, with respondents providing a median 55 percent probability of that happening, down from 60 percent in March.

via Reuters

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