Banks back off Fed rate hike hopes

Janet Yellen
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Just a few weeks into 2016, the Fed interest rate hikes that big banks were counting on to boost revenue clearly aren't coming.

A growing chorus of economists at banks including Goldman Sachs, Wells Fargo and Bank of America Merrill Lynch have said in recent days that the Federal Reserve won't raise interest rates as much as was anticipated toward the end of 2015. Most economists backed off predictions the Federal Open Market Committee will move in less than a month, when it meets again in mid-March.

"We expect the Fed to raise short-term interest rates only once before year end," Wells Fargo analysts wrote in a report issued Wednesday, representing a change in expectations. "Since we originally set our targets in October 2015, market and economic conditions have deteriorated."

After March, it's less clear when  or if  the central bank will follow through on other expected interest rate increases. A combination of disappointing macroeconomic data, stock market turbulence and threats to the stability of the U.S. economy has left the central bank with few arrows in its quiver to stave off crisis.