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Wall Street sees two more Fed hikes in 2018, three in 2019: Reuters poll


(Reuters) - Wall Street's top banks expect the to raise interest rates twice more this year and three times in 2019, in line with forecasts issued Wednesday by policy makers who signalled a modest acceleration to their pace of rate hikes along with increased confidence in the economy.

A poll on Wednesday found the median expectation among the so-called primary dealers, the 23 authorized to transact directly with the Fed, was for the central bank's benchmark overnight lending rate to climb to a range of 2.25 percent to 2.50 percent by the end of this year. It will rise to between 3.00 and 3.25 percent at the end of 2019.

The dealers' forecasts came as the Fed, as expected, lifted the federal funds rate 25 basis points on Wednesday to a range of 1.75 percent to 2.00 percent, marking its seventh rate increase since December 2015.

With Federal Reserve lauding an economy that he sees doing "very well," members of the also ratcheted up the number of rate increases they expect this year by one from their previous projections. They now expect two additional hikes this year for a total of four in 2018 versus three previously.

Eighteen of the 23 dealers participated in the poll, and 15 of those respondents saw two more hikes this year.

Opinion was more divided about 2019's increases, however, although the median outcome was in line with the Fed's own forecasts for three hikes. Five dealers saw three increases, and another five estimated four hikes, while six projected the Fed lifting rates just twice next year. One respondent - - forecast only one hike in 2019.

(Reporting by Charles Mikolajczak, Gertrude Chavez-Dreyfuss, Lewis Krauskopf, Caroline Valetkevitch, Richard Leong, Sinead Carew, Trevor Hunnicutt and April Joyner; writing by Dan Burns)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, June 14 2018. 03:13 IST