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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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