Wall Street Sees Rate Hike in June 2015

The Fed is expected to get more specific this week on a time frame for raising the Federal funds rate.
Matthew HellerSeptember 16, 2014
Wall Street Sees Rate Hike in June 2015

While it’s still a guessing game as to when the Federal Reserve will hike interest rates, Wall Street now has its eyes on June 2015, according to the latest CNBC Fed Survey.

Federal Reserve chair Janet Yellen

Federal Reserve chair Janet Yellen Official portrait of Vice Chair Janet L. Yellen. Dr. Yellen took office as Vice Chair of the Board of Governors of the Federal Reserve System on October 4, 2010, for a four-year term ending October 4, 2014. She simultaneously began a 14-year term as a member of the Board that will expire January 31, 2024.For more information, visit

Money managers, investment strategists and economists polled by CNBC also expect the Fed to finish the credit-tightening cycle in the third quarter of 2017 at 3.2%. And they see the Fed, at this week’s meeting, dropping its usual promise to keep rates low for a “considerable time” after its “quantitative easing” Treasury bond-purchase program ends.

“The message has been loud and clear that QE ends in October and rate increases are on the horizon,” John Kattar of Ardent Asset Advisors told CNBC.

A Better Way to Do Ecommerce

A Better Way to Do Ecommerce

Learn how Precision Medical leveraged OneWorld to cut the cost of billing in half and added $2.5M in annual revenue.

In last month’s CNBC survey, participants predicted that rates would go up in July 2015 and Fed funds would reach their terminal rate in the fourth quarter of 2017.

According to CNBC, the more hawkish outlook on rates reflects a more upbeat view of the economy. Survey respondents now see U.S. growth at 2.3% in 2014, up from 1.9% in the last survey, and 2.9% in 2015, up from 2.75%. The chance of recession in the next 12 months remains a slim 15%, the second lowest in the history of the survey.

The Organization for Economic Cooperation and Development forecast Monday that the economy would grow 2.1% this year and 3.1% in 2015.

“The U.S. economy finally has ‘normalized,’ ” said Allen Sinai of Decision Economics. “In a ‘normal’ business expansion, interest rates should rise. Zero interest rates make little sense in a normal business expansion.”

Noted John Donaldson of Haverford Trust Co., “We are still years in time and hundreds of basis points from a restrictive policy that could hamper the economy.”

The survey also found that Wall Street believes the best way to solve the tax-inversion problem is to reform the entire corporate tax system, not with a quick fix for just inversions.

“The nation is facing the same problem that many states in the Northeast and Midwest are facing — companies are leaving a hostile tax environment to go to a friendlier one,” said Rob Morgan of V2V Associates. “Lower the corporate tax rate now, America!”

Source: Wall Street Sees Fed Hike Sooner: CNBC Survey