Wall Street is now forecasting a slightly more hawkish monetary policy over the next two years in a change that follows the first press conferences and major economic speeches by new Fed Chair Janet Yellen.
The April CNBC Fed Survey shows respondents looking for a 1 percent Fed Funds rate on average to end 2015, up from 0.83 percent in March. The median is up a full quarter point. And half of the respondents now believe the Fed will reverse quantitative easing in 2015 and begin to reduce the size of its balance sheet. That's up from 39 percent in the March survey.
The amount of reduction is small: The balance sheet is seen declining by around $146 billion in 2015, up from $104 billion in the last survey. The Fed's balance sheet will decline once it decides to not replace securities that have matured. It has said it won't actively sell assets to reduce reserves in the system, which are now at $4.2 trillion.