Wonder who the loan wolf is?
- Median Fed Funds target among primary dealers is 0.75% by mid-2016 and 1.125% by end of 2016
- 11 of 18 primary dealers say fed will not begin to reduce its balance sheet for at least a year
Although the rate of unemployment has taken the rate to 5.0% inflation, still remains low and below the 2% fed target.
The Fed is expected to raise the fed funds rate by raising the rate on excess reserves. That rate is expected to represent the upper end of the fed funds range, which would be 0.50% if they were to raise rates as expected.
The fed would also drain reserves via reverse repurchase program. The reverse repo program should represent the floor for rates. Is expected that that would rise to 0.25%.
The Fed balance sheet is currently holding 4.5 trillion in various securities. Eventually, the Fed would like to trim that balance over time. 11 of the 18 dealers do not expect that the Fed will start that program in the next year.