Poll: Economists Expect Next Fed Rate Hike In June

Economists say investors can expect another modest rate hike in June.

A new Reuters poll of 80 economists found that consensus expectations are for the Fed to perform two more interest rate hikes in 2016, the first coming in June.

More than 60 percent of economists polled expect the next rate hike to come in June, while 20 percent expect it to be delayed until September.

More than 96 percent of economists polled expect at least one additional rate hike by the end of the year, but not a single one expects a change to rates following the Fed’s April 26-27 meeting.

Only a single economists expects that the Fed will actually reverse course and issue a rate cut by the end of the year.

“Only if GDP growth fails to pick up in Q2 will the FOMC deliver fewer than two hikes this year,” Rabobank analyst Philip Marey says.

Related Link: How Much Are Corporate Buybacks Propping Up Share Prices?

Historically-low interest rates have been one of the driving forces behind the tremendous rally in the stock market since the Great Recession. Companies have had the opportunity to take on low-interest debt to buy back millions of shares of stock.

Banks, on the other hand, have had their earnings and margins squeezed by lingering low interest rates.

So far in 2016, the SPDR S&P 500 ETF Trust SPY is up 2.0 percent while the Financial Select Sector SPDR Fund XLF is down 1.4 percent.

Disclosure: the author holds no position in the stocks mentioned.