Tags: Fed | Hike | Rates | Inflation

Fed Will Hike Rates Early to Fight Inflation — CNBC Survey

Monday, 19 March 2012 01:14 PM

The Federal Reserve forecasts economic conditions meriting low interest rates to stick around through the end of 2014, but that's not likely to happen, and rate hikes will come much sooner, a survey shows.

The CNBC survey on the matter finds that nine out of 10 market participants believe the Fed won't wait that long, with 54 percent predicting rate hikes to come by 2013.

The Fed's loose monetary policies such as rate cuts and asset purchases from banks, known as quantitative easing and designed to steer the economy away from deflationary decline, will boost consumer prices very soon.

Editor's Note: You Owe It to Yourself to Know What Obama and Bernanke Are Hiding From Americans

"There is no way the Fed will fulfill its pledge of keeping rates at present levels until 2014," writes Rob Morgan of Fulcrum Securities, CNBC reports.

"I'm shocked that some market watchers are still talking about another round of quantitative easing … The big risk for the Fed is falling behind the inflation curve."

At its March monetary policy meeting, the Fed made mention of quantitative easing, a tool the Fed has used twice to jolt the economy, pumping trillions of dollars into the financial system in the process.

Talk of a third round, known widely as QE3, persists.

Whispers alone of quantitative means markets view the economy as weak and expect the Fed to take steps even if those steps fuel inflationary fears.

"Bernanke has made it very clear that he wants to see an organic decline in the unemployment rate, meaning more Americans are finding jobs rather than dropping out of the labor market," says Lindsey Piegza, an economist at FTN Financial in New York, according to Reuters.

"Bernanke has not taken QE3 off the table. This is still very much an easing position they are assuming. The market was not necessarily immune to the idea that QE3 could be announced."

Editor's Note: You Owe It to Yourself to Know What Obama and Bernanke Are Hiding From Americans

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Monday, 19 March 2012 01:14 PM
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