More economists believe the Federal Reserve’s policy is on the right track, but they offer differing opinions when it comes to determining the appropriate path for the central bank, according to a survey released Monday.
The National Association for Business Economics’ policy survey found that 58 percent of economists believe the Fed‘s approach is “about right,” up from 53 percent who held that view in August. About 36 percent said monetary policy was too stimulative, down slightly from 39 percent in August.
“Most economists believe the Federal Open Market Committee will raise the federal funds rate in the second half of 2015, although nearly a third would prefer to see the liftoff come sooner,” said NABE Policy Survey Committee Chair Peter Evans, vice president at the Center for Global Enterprise.
“Looking further ahead, there is also a wide range of opinions about where the fed funds rate target will peak.”
Sixty-two percent of economists believe the Fed will hike its target for the fed funds rate above the current 0-to-25 basis-point range during the second half of the year, up from 34 percent in the previous survey.
Meanwhile, 9 percent forecast that the policy change will occur in the first half of this year, down significantly from the 41 percent who held this view in August.
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A quarter of respondents look for the Fed to keep policy on hold until 2016 or later.
Interestingly, 31 percent of those surveyed would prefer the central bank hike rates in the first half of 2015, more than three times the percentage that actually expects it to do so. Similarly, some 34 percent say the second half of 2015 is the appropriate time to begin tightening.
Turning to fiscal policy, some 38 percent of respondents said fiscal policy uncertainty was holding back economic growth, a stark contrast from the 53 percent who held that view in August.
They failed to agree on the current stance of fiscal policy.
While 46 percent of the survey respondents say fiscal policy was “about right,” 28 percent characterize it as “too restrictive,” and 22 percent feel it is “too stimulative.” Those figures were little changed from previous surveys.
The NABE’s semiannual Economic Policy Survey of 293 members was conducted between Feb. 5 and 19.