Economists expect Federal Reserve to hike interest rates in second half

Economists expect Federal Reserve to hike interest rates in second half

In a recent survey of 293 economists, 71 percent has said that they expect the Federal Reserve to increase the interest rates in the second half of current year. Economists also expressed confidence in the economic recovery across various sectors in the United States and said that the uncertainty over the Fed policy is not having much of impact on the economic recovery.

Since 2008, the rate at which banks lend funds to each other, has been hovering around zero percent. The National Association for Business Economics' (NABE) policy survey found that 58 percent of economists that the current Federal policy is “about right”.

NABE Policy Survey Committee Chair Peter Evans said, "Most economists believe the Federal Open Market Committee will raise the federal funds rate in the second half of 2015, although nearly a third would prefer to see the liftoff come sooner."

The rate hike could lead to small impact on the economy and the economic recovery. The decline in unemployment rate over the last few months, has led to improvement in consumer as well as business confidence. The stock markets are hovering around their all-time highs. Consumer spending has improved over the last few months and consumer confidence has touched multi-year high.

In her semiannual economic report to the Congress in February, Federal Reserve Chair Janet Yellen said the Fed continues to be "patient," suggesting that a rate hike is unlikely until June.

Nearly 31 percent of the economists said that they would prefer the Federal Reserve to increase bank rates in the first half of the current year. 34 percent of the economists polled prefer second half of 2015 as the appropriate time for rate hike. 49 percent of respondents consider immigration reform among their top 10 priorities.

The Economic Policy Survey of 293 members was conducted between February 5 and 19 by NABE.

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