The Federal Reserve (Fed) will make another 75 basis point rate hike in July, followed by a half percentage point hike in September, and won’t make another quarter point move until November at the earliestaccording to economists polled by Reuters.
Key results
The latest survey results, released Wednesday before Fed Chairman Jerome Powell appears before the Senate Banking Committee as part of his semi-annual monetary policy testimony to Congress, show the momentum remains for the US central bank to do more, not less, despite growing recession concerns and strong selling in financial markets.
In the survey conducted by Reuters between June 17 and 21, almost three quarters of economists, 67 out of 91 expected another interest rate hike in July. This would bring the fed funds rate to a range of between 2.25% and 2.50%, roughly the neutral level at which the Fed estimates the economy is neither stimulated nor constrained.
A large majority expect the central bank raise its interest rate by another 50 basis points in September, and opinion is more divided on whether it will raise 25 or 50 basis points in November. Most expect the Fed to raise rates by 25 basis points at its December meeting.
This would drive the federal funds rate to a range of 3.25%-3.50% at the end of this year75 basis points more than was thought in a survey published just two weeks ago.
About three quarters of the respondents, 68 of 91 considered that the interest rate at the end of the year would be between 3.25% and 3.50% or morein line with the Fed’s own “dot plot” showing policymakers’ projections.
The survey anticipated only a 25 basis point rise in the first quarter of next yearwhich would put the federal funds rate at 3.50%-3.75%, the possible final rate.
It was expected that the Fed to pause in the second and third quarters of 2023 and cut rates by 25 basis points in the last quarter of next year, based on the median of the forecasts of a smaller sample. But forecasts for where the fed funds rate will be at the end of 2023 ranged from 2.50%-2.75% to 4.25%-4.50%, underscoring the heightened uncertainty.
Source: Fx Street
With 6 years of experience, I bring to the table captivating and informative writing in the world news category. My expertise covers a range of industries, including tourism, technology, forex and stocks. From brief social media posts to in-depth articles, I am dedicated to creating compelling content for various platforms.
