Reuters Poll Shows Fed Likely to Raise Rates Twice in 2015

The U.S. Federal Reserve will probably raise interest rates twice this year, with the first increase in almost a decade coming as early as next month, according to a Reuters poll of economists published on Thursday.

The survey gave a median 55 percent chance that the U.S. central bank would raise its short-term lending rate twice this year. Economists put a 60 percent probability on a September rate hike and an 85 percent chance that it would move by year-end.

“If the FOMC (Federal Open Market Committee) acts in September, there is a good possibility that it will in December as well,” said economist Terry Sheehan of Stone & McCarthy in Princeton, New Jersey.

The case for a September monetary policy move was bolstered by solid job gains and a rebound in wages in July. In addition, economic growth accelerated in the second quarter after bad weather constrained it at the start of the year.

After China’s surprise devaluation of the yuan, U.S. financial markets have slightly pushed rate hike expectations to December. The Fed, currently targeting a range of zero to 0.25 percent, has not raised interest rates since 2006.

The midpoint of the range of federal funds rate expectations in the survey came to 0.375 percent by the end of September and 0.625 percent at the turn of the year, unchanged from a July poll.

Even if the Fed raises interest rates twice this year, the tightening process would still be gradual, economists said, citing a strong dollar.

via Reuters

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