WORLD / AMERICAS
US economists see Fed hiking lending rate sooner than expected: survey
Published: Mar 22, 2021 08:18 PM
The Federal Reserve has vowed it won't raise its benchmark lending rate anytime soon, but US economists in a survey released Monday believe the central bank could be forced to enact a hike as soon as 2022.

The Federal Reserve building is seen on June 17, 2020 in Washington, DC. US central bankers are much more optimistic about the economic outlook, boosting their median growth estimate by more than two points to 6.5 percent, the Federal Reserve said March 17, 2021. Photo: VCG

The Federal Reserve building is seen on June 17, 2020 in Washington, DC. US central bankers are much more optimistic about the economic outlook, boosting their median growth estimate by more than two points to 6.5 percent, the Federal Reserve said March 17, 2021. Photo: VCG

The National Association for Business Economics (NABE) reported 46 percent of participants surveyed see the central bank's policy-setting Federal Open Market Committee (FOMC) raising its lending rate in 2022, while 28 percent think they'll up it in 2023.

Only 12 percent think the rate will be changed after that year, despite most officials at the conclusion of the FOMC's two-day meeting that concluded on Wednesday saying that they don't expect to raise it though until at least 2023.

The NABE survey is the latest sign of rising expectations for inflation, after Congress rolled out massive stimulus measures over the past year to keep the world's largest economy afloat as COVID-19 disrupted business.

President Joe Biden earlier in March signed the $1.9 trillion American Rescue Plan, which was the third major relief measure passed during the pandemic and drew protests from some economists who said it could overstimulate the economy and drive up prices.

The Federal Reserve one year ago slashed its benchmark lending rate to zero, then months later said it would keep it there until inflation hit a sustained level of 2.0 percent - a pledge Fed Chair Jerome Powell reiterated last week at the conclusion of the FOMC meeting.

However, economists are skeptical. The NABE survey reports 61 percent of respondents believe inflation risks are greater than in the past two decades, while 37 percent disagree. The survey was conducted while Biden's relief plan was under consideration in Congress but before it was approved, and respondents were split over the government's overall fiscal response to the pandemic.

Thirty-three percent of respondents said the government's response was adequate, a slight decrease from the previous survey in August 2020.
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