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Most Economists Say Fed Will Raise Rates in 2015
World Economy

Most Economists Say Fed Will Raise Rates in 2015

The vast majority of business economists expect the Federal Reserve will raise interest rates before the end of the year, according to a survey released Monday.
Minutes from the Fed’s meeting in late July showed that officials could raise rates as early as September. Seventy-seven percent of survey respondents believe the Fed will raise rates from their current near-zero levels, but only 37% of respondents believe it will happen as soon as next month, AP reported.
The survey was done by the National Association of Business Economics. When it surveyed its members in March, 71% of economists believed the Fed would raise rates in 2015.
“A large and growing majority of business economists expects the Federal Open Market Committee to raise its target for the federal funds rate before the end of 2015,” NABE President John Silvia, chief economist at Wells Fargo, said in a statement.
With three Fed meetings left in 2015, most NABE economists expect the Fed will raise rates at their December meeting. The Fed’s next scheduled meeting is Sept. 16-17.
Yellen has stressed that the Fed views all meetings as potential times when the Fed could decide to begin raising interest rates. But private economists expect the central bank would prefer to make its first rate move at a meeting followed by a news conference that would give Yellen an opportunity to explain the Fed’s decision. The September meeting and the Dec. 15-16 meeting will be followed by news conferences. The Fed’s other remaining meeting this year is on Oct. 27-28 and no news conference is scheduled after that meeting.
If the US economy continues to improve at its current pace, economists say the Fed’s interest rate will eventually top out at 3%. Inflation is also expected to remain relatively low, according to the survey, with 73% of respondents expecting inflation to rise to 2%–the Fed’s goal–by 2019.
Half of economists surveyed believed the government’s current spending levels were “about right” while 29% said government spending was “too restrictive.”
A slight majority of economists said policymakers should look at places like Medicare and Medicaid, defense spending and other entitlement programs as places to cut spending long-term.

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