Investing.com – Markets continued to price in only two rate hikes by the Federal Reserve (Fed) in 2017, in line with a poll of 100 economists released on Wednesday and less aggressive than the central bank’s own call for three increases this year.
Fed fund futures currently price in a first hike in June with the second not occurring until December, according to Investing.com's Fed Rate Monitor Tool.
That coincided with a Reuters’ poll of 100 economists that showed interest rates remaining at the current level of 0.50%-0.75% until the second quarter when a 25 basis point hike is likely.
The survey further showed that consensus put the next tightening to 1.00%-1.25% to occur in the fourth quarter.
Of note, the news agency highlighted that 14 of the economists surveyed were more hawkish, putting their bets on the first hike to take place in March.
Inflation data released on Wednesday also convinced ING senior economist James Knightly that the first move would come by the end of the first quarter.
Knightly noted that it was the first time that both headline and core U.S. inflation had breached 2% since the second quarter of 2014.
“With headline inflation likely to move up towards 2.5% in the second half of the year and President Trump promising pro-growth and pro-job policies in what already is a fairly strong story, it means further Federal Reserve rate hikes are not far away,” he insisted, specifying that he forecast the first hike to be in March with another move higher in the third quarter.
Market participants may have a chance to hear Fed chair Janet Yellen’s comments on the inflation data when she responds to questions after giving a speech on monetary policy to the Commonwealth Club in San Francisco later on Wednesday at 3:00PM ET (20:00GMT).