US Fed Expected to Raise Rates in 2015

The Federal Reserve is expected to start raising U.S. interest rates in the third quarter of next year as the unemployment rate falls and the economy charts a new path of stronger growth, a Reuters survey of economists showed.

The U.S. central bank slashed short-term interest rates to a record low close to zero in December 2008 and committed to keep them there while it nursed the economy back to health.

Thirty-two of 63 economists surveyed forecast the Fed hiking overnight rates in either the second or third quarters of 2015, while 14 saw a rate hike coming earlier and six saw it coming later.

Two simply said sometime in 2015. The median forecast pointed to the third quarter.

“You are looking at an unemployment rate that probably gets below 6 percent by the second half of 2015 and that’s within a hair’s breath of full employment,” said Scott Anderson, chief economist at Bank of the West in San Francisco. “It will start to push up wage growth by that period.”

The poll forecast the jobless rate averaging 6.4 percent this year. This suggests that as early as the second quarter of this year, the unemployment rate could breach the 6.5 percent level that Fed officials have said would trigger discussions over when to raise interest rates from near zero.

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