More US Federal Reserve policymakers expect just 1 rate increase this year

WASHINGTON – More Federal Reserve policymakers expect just one or no increase in short-term interest rates will occur this year compared with three months ago, reflecting a sharp slowdown in the economy at the start of the year.

Five of the 17 Fed policymakers now forecast that the short-term rate will be 0.375 per cent at the end of this year, up from just one in March. Two foresee no increase until next year, the same as in March. The current rate is approximately 0.125 per cent, so only one quarter-point increase would bring it to 0.375 per cent.

The median forecast remains 0.625 per cent, which would require two increases.

A lower rate at the end of the year suggests policymakers expect the first increase may come later than they thought three months ago.