Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Economists See Fed on Hold Through 2020 With No Rate Cut: Survey

Published 04/26/2019, 12:00 AM
Updated 04/26/2019, 03:00 AM
Economists See Fed on Hold Through 2020 With No Rate Cut: Survey

Economists See Fed on Hold Through 2020 With No Rate Cut: Survey

(Bloomberg) -- The Federal Reserve won’t ease interest rates if core inflation softens, according to a new Bloomberg survey of economists, contradicting investors who expect the central bank to cut later this year.

Respondents to the April 23-25 poll saw the target range for the benchmark federal funds rate staying right where it is -- at 2.25 percent to 2.5 percent -- through 2020, according to median expectations. Only two of the 39 economists polled forecast a rate cut in 2019. Pricing in interest rate futures, meanwhile, showed investors assigned almost a 60 percent probability to a rate cut by December.

Economists and market participants alike expect Fed policy makers to make no change to rates when they gather for two days next week in Washington. A 2:00 p.m. statement on May 1 will be followed by a 2:30 p.m. news conference with Chairman Jerome Powell. Officials won’t update their quarterly forecasts, including the dot plot of interest rate projections, until their next meeting in June.

In response to other survey questions, economists made it clear they don’t believe the Fed will rush into either a hike or a cut as economic conditions evolve.

“The Fed’s going to sit tight for the foreseeable future,” said Ryan Sweet, head of monetary policy research at Moody’s Analytics Inc.

Sweet said the Fed will be mostly guided by inflation in the coming months amid concerns that price pressures have been running below its 2 percent target. But he didn’t expect that a further drop in the central bank’s preferred gauge of core inflation would result in a cut unless it were significant and sustained.

Economists rejected the notion that President Donald Trump had influenced the Fed, with 69 percent saying his repeated criticisms of monetary policy had no impact on decision making at the central bank.

Two-thirds of respondents also said they didn’t think it likely that Stephen Moore, who Trump has said he would nominate for an open seat on the Fed’s Board of Governors, would ever be confirmed to the position. If he were confirmed, however, a narrow majority said Moore would influence policy in a dovish direction.

Moore, a former campaign adviser to Trump and economics commentator, has said the Fed’s December quarter-point rate increase was a mistake and that officials should cut rates by half a percentage point.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.