Most economists expect interest rates at the end of June to be near their current levels, according to the American Banker's new yield and rate survey, which makes its debut today in Market Monitor.
But there is a dissenter. Taking exception to the consensus is Philip Braverman of DKB Securities USA; he thinks the Federal Reserve will cut rates again in June.
The survey asks 10 to 20 economists their feelings about the direction of market and mortgage rates as well as official rates set or strongly influenced by the Federal Reserve.
A complete table of the survey participants and their rate predictions appears on page 44.
After slipping at the start of the year amid recession fears, rates have jumped recently, spurred by signs of faster growth and consequent worries about inflation.
Mr. Braverman, with others, feels the economy was not as strong in the first quarter as suggested by the bullish employment reports for February and March, which rocked the financial markets.
Unlike most others, however, he expects the Fed to recognize this quickly and cut rates for the fourth time in 12 months.
"By June, the 'false positives' we have gotten will have been reversed," he said last week. "The same thing happened last year, from distortions caused by seasonal adjustment mechanisms that don't always reflect the real world."
Last year the Fed reduced rates in July. Mr. Braverman thinks it will happen earlier this summer, for several reasons.
Firstly, a rate cut wouldn't be a change of policy this time around.
Besides, this is an election year; the Fed would probably prefer to move sooner rather than later, then hibernate between Labor Day and Election Day.
Finally, Chairman Alan Greenspan and others at the central bank have suggested they know the economy is not overly strong, Mr. Braverman said. Lower rates, then, await only the markets' recognition that they are necessary.
