The Fed will stay put in 2021 despite growing concerns about overheating economy, CNBC survey shows

Federal Reserve Jerome Powell testifies during a Senate Banking Committee hearing on “The Quarterly CARES Act Report to Congress” on Capitol Hill in Washington, U.S., December 1, 2020.

Susan Walsh | Reuters

The Federal Reserve will remain on hold for the rest of this year despite an increasing belief among respondents to the CNBC Fed Survey that it should throttle back the stimulus it’s providing to the US economy.

Respondents forecast the Fed won’t reduce it’s $120 billion of asset purchases until January 2022, three months later than the March survey. And the first rate hike won’t come until December of next year.

Yet 68% of the 34 respondents say the Fed does not need to make those asset purchases to help the market function and 65% say the Fed doesn’t need to do them to help the economy. And 56% say the Fed should respond to the massive fiscal stimulus from the Biden administration by both cutting back asset purchases and raising rates sooner.

“While it is appropriate for the Fed to not comment on fiscal policy, it is entirely appropriate for monetary policy to take significant fiscal policy shifts into account in calibrating the stance of monetary policy, but the Fed is not doing this,” wrote John Ryding, chief economic advisor at Brean Capital. “Monetary policy looks set to be too easy for too long.”

“Pressure on the Fed to start tapering QE, which is doing nothing for economic growth to begin with, will only intensify in the coming months” said Peter Boockvar, chief investment officer at Bleakley Advisory Group.

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