The National Association for Business Economics (NABE) ‘s March 2020 economic policy survey found that nearly half of respondents believe the Federal Reserve could tighten monetary policy by the end of 2022. The survey , conducted between February 22 and March 5, is a summary of responses from 205 NABE members.
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The Federal Reserve has been targeting a range of 0.0% to 0.25% for the federal funds rate since March 15, 2020. The overwhelming majority of survey respondents (88%) expect the next move to Federal funds target rate is a rate hike. , while 3% predict the next move will be a rate cut, implying that the Fed would aim for a negative fed funds rate.
About 46% of NABE members surveyed believe the Federal Reserve will raise the federal funds target in 2022, while 12% say later this year. About 28% believe that interest rates will be increased in 2023 and 12% believe that the rate hike will come after 2023.
About 72% of respondents expect the upper end of the target fed funds rate range to stay at 0.25% or even lower until the end of 2021. Only 3% of respondents expect the top of the Fed’s target range to be 0.75. % or more by the end of 2021, while 47% of members expect a target level of 0.75% or more by the end of 2022. Almost a third of respondents to the survey (30%) is looking for a higher target of 0.25% or less to persist until 2022.
Almost three-quarters of respondents to the NABE survey, or 72%, believe that the current stance of US monetary policy is “about right”. About one in four respondents (26%) consider the current Fed policy to be “too stimulating”, compared to 20% who expressed this view in the August survey, while 2% consider it “too restrictive” .
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Regarding fiscal policy, 41% of survey respondents find current fiscal policy to be “about right”, up slightly from the 37% who felt so in the August survey. 2020. Thirty-four percent of respondents say the current policy is too stimulating, up from 17% last August. About 25% of respondents believe the current policy is too restrictive, compared to 45% in the previous survey.
About a third of respondents (38%) believe that the main objective of current fiscal policy should be to stimulate more robust economic growth in the medium to long term, while 31% believe that the main objective should be to stimulate economic growth in the medium to long term. growing as quickly as possible. possible.
About 8% of respondents believe that current fiscal policy should focus primarily on tackling income inequality, while 7% believe deficit and debt reduction should be the primary goal. Around 64% of respondents are in favor of implementing structural policies to support stronger economic growth, while more than a third are each in favor of increasing tax revenues (38%) and greater control of expenditure (37%). Sixteen percent believe that further action should be taken, while 8% believe that no policy changes should be made.
The majority of respondents (67%) believe that coordination between fiscal and monetary policy is desirable, compared to 27% who say it would not.
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When it comes to assessing Congress’ budgetary response to the pandemic, 37% of respondents consider the response insufficient, slightly lower than the 40% in the August 2020 NABE survey, while 33% consider the response adequate. also down slightly from 37% in The previous survey: About 18% of those polled believe the budget response from Congress is excessive, compared to 11% in the August survey. It should be noted that the investigation was conducted while the US bailout was under consideration in Congress and all responses were submitted before the legislation was enacted.
Survey respondents differ as to the optimal way for Congress to increase its revenues. About 55% of respondents support a broad energy or carbon tax (the same share as in the August survey), while 36% support an increase in corporate tax rates. Almost a third of respondents (29%) are in favor of increasing social security and / or health insurance contributions. Almost the same proportion of respondents support adopting a wealth tax (27%) or increasing personal tax rates (25%).
Respondents are also divided over what should be the top three political priorities of the Biden administration for its first year in office. Almost half of the panelists (46%) see the fight against COVID-19 as a top priority, followed by 40% who cite promoting economic recovery. Around 38% of respondents suggest investing in infrastructure is a top priority, a significant spike compared to no respondent ranking it among their top three priorities in the August survey. The other important issues most frequently cited are climate change (30%), health care policy (25%) and immigration (22%).