Yesterday the minutes from the most recent meeting of the Fed's rate setting committee, the Federal Open Market Committee were released. In them, it was revealed that the central bank will be unveiling a new way of communicating the individual member's thoughts about the path of interest rates.
While that will be illuminating for economy wonks, it won't provide any definitive clues as to when the FOMC may raise the target federal funds rate, currently aimed between 0 and 25 basis points. The Fed has stated however, that the fed funds rate will remain at its current position until mid-2013.
According to a new survey of primary dealers by the Federal Reserve Bank of New York, it could be even longer.
Primary dealers are partners with the New York Fed and help implement monetary policy by providing information and analysis, participating in debt auctions and also serving as market makers for the New York Fed when called upon to do so.
They include big investment companies such as Barclays Capital, BNP Paribas Securities, Morgan Stanley, Goldman, Sachs and Co., and so on.
The survey was done before the FOMC's December meeting and found that 45 percent of the primary dealers questioned believe that the fed funds rate won't be raised until the second quarter of 2014.
At least that's how they felt at the beginning of December. Though economic data has been reasonably positive in the interim, it's hard to imagine those forecasts changing drastically.
CD rates are, of course, closely tied to the federal funds rate. When the FOMC hikes rates, CD rates will go up. The good news is that they may increase in about a year and-a-half.
Let's just stick with the good news.
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