From the Wall Street Journal Online:
The Fed is expected to continue to move interest rates higher until the federal-funds rate, a key short-term rate that helps determine rates throughout the economy, reaches 4.5%, based on the median estimate of the 56 economists who were surveyed Aug. 5-9...
On average, the economists expect the funds rate to be 4% by the end of 2005 and 4.25% by mid-2006. But some think that the Fed will go further -- and faster. Economists at Goldman Sachs, for example, believe the central bank will bring the funds rate all the way to 5% by the middle of next year.
It seems people are coming around to Jim Hamilton's point of view (and The Big Picture's and Angry Bear's and William Polley's, among others):
By a narrow margin, economists surveyed in the latest Wall Street Journal Online forecasting survey say they think there's a greater risk the Fed will go too far in its campaign of rate increases than it will stop short of what's needed. About 54% said they see a greater risk of the Fed moving too aggressively in the next year, while 46% say the bigger concern is rates will be kept too low...
Ethan Harris of Lehman Brothers Inc. worries that the Fed will overshoot, but he says that the problem is the central bank won't know if it has gone too far until it sees subsequent economic data. "There's a danger that the Fed will keep pushing the brakes until they finally work," Mr. Harris says.
On average, the economists expect the funds rate to be 4% by the end of 2005 and 4.25% by mid-2006. But some think that the Fed will go further -- and faster. Economists at Goldman Sachs, for example, believe the central bank will bring the funds rate all the way to 5% by the middle of next year.