Latest consensus does not anticipate fed funds rate to increase as quickly as FOMC “dot plot” predictions.
January’s issue of Wolters Kluwer’s Blue Chip Financial Forecasts suggests that, on the heels of its December 2016 rate hike, the Federal Open Market Committee (FOMC) will raise the federal funds rate twice in 2017 - a consensus that is more conservative than the FOMC
“dot plot,” which indicates three rate hikes.
The panel also anticipates a gradual acceleration in inflation, approaching the Federal Reserve’s 2.0% target by the end of 2017 and real GDP growth about half a percentage point faster than last year, measured on a fourth-quarter-over-fourth-quarter basis.
Other consensus findings and details from Wolters Kluwer’s Blue Chip Financial Forecasts exclusive survey include:
- Q12017 consensus forecasts for each of real GDP, the GDP price index and the Consumer price are 2.3%, 2.0% and 2.3% respectively.
- 57.8% of the panel expects that the FOMC will next increase the federal funds rate at its June, 2017 meeting; no panelists expect increases to come as early as this month.
- The consensus expects that U.S. medium to long-term U.S. treasuries will resume their upward climb in the second half of 2017 and first half of 2018 after remaining range bound over the first half of 2017.
- Only 18% of panelists forecast that the United States will experience a recession in 2017.
- The U.S. dollar is expected to continue to strengthen against a broad basket of selected major foreign currencies.
Wolters Kluwer’s Blue Chip Financial Forecasts highlights the prevailing opinion about the future direction and level of U.S. interest rates that is critical for profitable business management. The newsletter is created through a survey with participants from leading firms including Bank of America-Merrill Lynch, Goldman Sachs & Co., Swiss Re, Loomis, Sayles & Company, and J.P. Morgan. The survey compiles forecasts for the next six quarters for multiple variables not limited to the federal fund rate, prime rate, state and local bonds, home mortgage rate and consumer price index.
Wolters Kluwer’s Blue Chip Financial Forecasts is published monthly by Wolters Kluwer Legal & Regulatory U.S., a global leader in information services and solutions for legal professionals. For more information on Wolters Kluwer’s Blue Chip Financial Forecasts please visit, https://lrus.wolterskluwer.com/product-family/blue-chip.