Tags: Fed | Inflation | Employment | Targets

Wall Street Sees Fed Adopting Inflation, Employment Targets

Thursday, 05 Jan 2012 10:35 AM

The Federal Reserve is likely to adopt specific inflation and employment targets as it continues to reinvent monetary policy in the wake of the financial crisis, according to a survey of Wall Street firms that deal with the U.S. central bank.

The survey of primary dealers also saw a 45 percent chance the Fed would begin to hike interest rates from their current near-zero level only after the middle of 2014.

Last year, the Fed said it expected to keep rates on hold until at least mid-2013 and will begin offering interest rate forecasts at a meeting later this month that could show rates are likely to be on hold for longer.

The New York Fed on Wednesday for the first time posted the aggregated results of the questionnaire it routinely distributes to the 21 U.S. primary dealers.

The survey, conducted before Federal Open Market Committee meeting in December, asked dealers to predict ways the Fed could change its monetary policy strategies in the future.

Dealers said they expected the Fed to sharpen its communication strategy with specific forecasts for the fed funds rate, and some thought the Fed could try to raise the interest on its excess reserves rate — a way to tighten monetary policy — within the coming two years.

The New York Fed said it will post the results of each primary dealer survey on the day after the associated FOMC meeting minutes are released.

The Fed released the minutes from the December FOMC meeting on Tuesday.

Primary dealers are the banks and securities firms authorized to deal directly with the Fed and the Treasury Department to help carry out monetary policy and distribute U.S. debt.

© 2017 Thomson/Reuters. All rights reserved.

   
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2012-35-05
Thursday, 05 Jan 2012 10:35 AM
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