WSJ Survey: Fed May Raise Rates Slowly, and End Up Back at Zero

13-Aug (Wall Street Journal) — The Federal Reserve could move more slowly than expected raising short-term interest rates, see rates return to near-zero levels within a half-decade and start shrinking its large asset portfolio sometime next year, according to private forecasters surveyed by The Wall Street Journal.

The Journal polled 62 business and academic economists Friday through Tuesday, though not every economist answered every question. Forecasters overwhelmingly expect the Fed’s first rate increase in nearly a decade will come in September.

…Just 31% of economists polled said it is unlikely the fed-funds rate will return to zero within five years of liftoff. More than two-thirds saw the Fed potentially ending up back where it started.

[source]

PG View: So the survey participants think we’ll start the tightening cycle in September and gradually ratchet higher until the economy stalls and the Fed eases back to the zero-bound within 5-years. If lift-off does occur, I’d be surprised if it took anywhere close to that long to get back to zero.