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Many business economists see first U.S. rate hike this year

An eagle tops the U.S. Federal Reserve building's facade in Washington, July 31, 2013. REUTERS/Jonathan Ernst
An eagle tops the U.S. Federal Reserve building's facade in Washington, July 31, 2013. REUTERS/Jonathan Ernst

WASHINGTON (Reuters) - Many business economists expect the Federal Reserve to start raising U.S. interest rates as early as this year, in contrast to forecasts on Wall Street where the consensus is much more solidly in 2015.

A National Association for Business Economics survey published on Monday found that a third of economists expected the first rate hike this year. Fifty-three percent anticipated an increase in 2015, with 40 percent believing that would occur in the first half of next year.

"Higher interest rates appear to be in the cards," said NABE survey chairman Timothy Gill, who is also deputy chief economist at the National Electrical Manufacturers Association.

The survey was conducted between February 19 and March 5, with 48 economists participating.

It stood in contrast to a Reuters survey of 17 big bond dealers taken after the Fed's latest policy pronouncements on Wednesday, which found that the lion's share did not see a rate hike until the second half of next year.

Similarly, a Reuters poll of 63 Wall Street economists published early this month found only a handful expected the U.S. central bank to start increasing overnight lending rates this year. That median forecast from that poll pointed to a lift-off date in the third quarter of next year.

The Fed slashed short-term rates to a record low close to zero in December 2008 and committed to keep them there while it nursed the economy back to health.

Fed Chair Janet Yellen on Wednesday suggested the central bank could start raising interest rates six months after ending its monthly bond buying program. The Fed is already reducing the amount of bonds it is buying each month and is expected to wrap-up the program later this year.

"Panelists anticipate the Fed will continue to taper its long-term asset purchases throughout 2014, with the majority of the panel expecting purchases to end entirely in the fourth quarter," said Gill.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

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