Reuters Polls Points to 70% Chance of December Rate Hike

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.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza