The Federal Reserve won’t ease interest rates if core inflation softens, according to a new Bloomberg survey of economists, contradicting investors who expect the central bank to cut later this year.
Respondents to the April 23-25 poll saw the target range for the benchmark federal funds rate staying right where it is — at 2.25 percent to 2.5 percent — through 2020, according to median expectations. Only two of the 39 economists polled forecast a rate cut in 2019. Pricing in interest rate futures, meanwhile, showed investors assigned almost a 70 percent probability to a rate cut by December.
Economists and market participants alike expect Fed policy makers to make no change to rates when they gather for two days next week in Washington. A 2:00 p.m. statement on May 1 will be followed by a 2:30 p.m. news conference with Chairman Jerome Powell. Officials won’t update their quarterly forecasts, including the dot plot of interest rate projections, until their next meeting in June.
In response to other survey questions, economists made it clear they don’t believe the Fed will rush into either a hike or a cut as economic conditions evolve.
“The Fed’s going to sit tight for the foreseeable future,” said Ryan Sweet, head of monetary policy research at Moody’s Analytics Inc.