Fed dot plot seen shifting to 2023 rate liftoff – Bloomberg Survey

“Federal Reserve (Fed) officials this week could project interest-rate liftoff in 2023 amid faster economic growth and inflation, but they won’t signal scaling back bond purchases until August or September,” as per the June 04-10 Bloomberg survey of 51 economists.

Key findings…

More than half predict the quarterly rate-forecast “dot plot,” released after the conclusion of the Fed’s two-day policy meeting on Wednesday, will show the median of 18 officials penciling in at least one 2023 increase. The remainder sees no liftoff from near-zero rates until 2024 at the earliest, mirroring the Fed’s forecast in March.

Even so, the poll respondents see no rush by the Fed to scale back monetary stimulus. Some 40% expect the Fed to take its first step toward tapering its current $120 billion in monthly bond purchases in late August.

That’s when Chair Jerome Powell could give an early signal at the Fed’s Aug. 26-28 policy retreat in Jackson Hole, Wyoming, if he follows tradition and speaks there again this year. Another 24% see that happening the following month.

Economists are split on when the actual tapering announcement is most likely, with one-third predicting September and another third saying December.

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