The Canadian Press - ONLINE EDITION

NABE economists split on whether Fed will complete pullback in bond purchases by year's end

  • Print

WASHINGTON - Business economists are almost equally divided over whether the Federal Reserve will pare its bond purchases at the current pace through year's end or pause to let the economy recover further.

The views were unveiled Monday by the National Association for Business Economics. The NABE conducted its twice-a-year survey of 230 members between Jan. 30 and Feb. 6, before Janet Yellen's first appearance before Congress as Fed chair.

About 43 per cent of NABE members said they thought the Fed would complete its pullback in bond purchases in the fourth quarter. About 42 per cent said they thought the Fed would finish in 2015 or later.

At each of its last two policy meetings, the Fed cut bond purchases by $10 billion to the current pace of $65 billion a month. There are seven meetings left in 2014. The Fed's bond purchases have been intended to drive down loan rates to stimulate spending and economic growth.

A majority of those surveyed agreed with the Fed's gradual end to its accommodative stance, with 57 per cent saying current monetary policy is "about right." About 37 per cent thought it was "too stimulative."

Cutting back on the bond purchases and the prospect of further cutbacks has already prompted mortgage rates to rise.

Most respondents thought the Fed would wait until 2015 to start raising its key short-term interest rate above the current level near zero. Yellen told Congress earlier this month that the Fed would keep the rate near zero "well past" the time the unemployment rate falls below 6.5 per cent, as long as inflation remains low. The unemployment rate was 6.6 per cent in January, a five-year low.

About 36 per cent of respondents thought the Fed would raise the federal funds rate in the first half of 2015, while 37 per cent thought the rate hike would come in the second half. Just 12 per cent thought a hike would occur in the second half of this year, while 15 per cent thought it would happen in 2016 or later.

As for government spending, 21 per cent thought fiscal policy was "too stimulative," while 37 per cent thought it was "about right." About 39 per cent thought fiscal policy was "too restrictive."

Nearly all the respondents — or 83 per cent — did not think Congress should put a permanent cap on the debt limit at its current level around $17 trillion.

Respondents were also split on the economic impact of the new federal health care law. While 18 per cent thought the Affordable Care Act would boost growth, 42 per cent thought it would have no impact and 30 per cent thought it would hurt growth.

Fact Check

Fact Check

Have you found an error, or know of something we’ve missed in one of our stories?
Please use the form below and let us know.

* Required
  • Please post the headline of the story or the title of the video with the error.

  • Please post exactly what was wrong with the story.

  • Please indicate your source for the correct information.

  • Yes

    No

  • This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.

  • Cancel

Having problems with the form?

Contact Us Directly
  • Print

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

Have Your Say

Comments are open to Winnipeg Free Press print or e-edition subscribers only. why?

Have Your Say

Comments are open to Winnipeg Free Press Subscribers only. why?

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.

letters

Make text: Larger | Smaller

LATEST VIDEO

In the Key of Bart: Peladeau-Re-Mi

View more like this

Photo Store Gallery

  • A squirrel enjoys the morning sunshine next to the duck pond in Assiniboine Park Wednesday– June 27, 2012   (JOE BRYKSA / WINNIPEG FREE PRESS)
  • JOE.BRYKSA@FREEPRESS.MB.CA Local-(Standup photo)- Humming Around- A female ruby -throated hummingbird fly's through the bee bomb  flowers Friday at the Assiniboine Park English Garden- Nectar from flowers are their main source of food. Hummingbirds wings can beat as fast as 75x times second. Better get a glimpse of them soon the birds fly far south for the winter - from Mexico to South America- JOE BRYKSA/WINNIPEG FREE PRESS- Sept 10, 2009

View More Gallery Photos

Poll

Do you think Manitoba needs stronger regulations for temporary workers?

View Results

View Related Story

Ads by Google