US could wait until next summer to raise interest rates, say economists
Surveyed experts predicted last weeks rate rise would be followed by two more next year, not three.
The Federal Reserve could wait until at least next summer before raising interest rates again, according to Wall Street economists surveyed by the Financial Times. Expectations that a rate rise last week by the US central bank would be followed by three more next year were played down by the 31 economists surveyed, who predicted only two rises were likely.
The New York Dow Jones index soared last week to within 160 points of a record 20,000 amid forecasts that a huge stimulus package in the first year of Donald Trumps presidency would trigger an economic boom.
While Trump has promised to cut taxes affecting middle-income earners and pump funds into major infrastructure projects, many economists are wary that Congress could delay or block the moves, fearing a steep rise in the governments budget deficit.
Global growth will improve next year but remain under its long-term trend, Gregory Daco, an economist with Oxford Economics, told the newspaper. Trumps policies, and the expectation of them, will be pivotal to global developments.
The strengthening of the dollar is also likely to hit exports and increase the price of imports, increasing the US balance of payments deficit.
The value of companies in the Dow Jones index has almost doubled since the 11,500 it recorded at the height of the tech boom in 1999, while the UKs FTSE 100 index of top companies languished on Friday at only slightly above 1999’s 6,950 at 7011.