A STRENGTHENING U.S. economy may spur the Federal Reserve to raise interest rates twice in the next three and a half months as a tight labor market pushes risks to the upside, a Bloomberg survey showed yesterday.

Median results of the survey of 41 economists, conducted Dec. 5-7, showed economists still expect three rate hikes in 2018 but moved forward one of those projected moves to March from June. There was near unanimity the U.S. central bank will raise the target range for the federal funds rate a quarter percentage point to 1.25 percent to 1.5 percent after its two-day meeting starting Tuesday in Washington.

“The unemployment rate has fallen sharply to 4.1 percent and on top of that we’ve had two straight quarters of 3 percent-plus growth,” said Stephen Stanley, chief economist at Amherst Pierpont Securities. “Everything on the economic front is pointing toward more and not fewer hikes.”

The Federal Open Market Committee will issue a statement and new economic projections at 2 p.m. Wednesday. Fed Chair Janet Yellen is scheduled to hold a press conference at 2:30 p.m.

That’s expected to be Yellen’s last post-meeting session with the media. Fed Governor Jerome Powell, U.S. President Donald Trump’s nominee to succeed Yellen in February, is likely to be confirmed by the Senate.

Economists don’t expect the leadership change to result in any major shift in Fed policy in 2018. Ninety percent of those surveyed said they believe the path of the fed funds rate will be “about the same” next year compared with their expectations had Yellen been reappointed.

Economists do, however, see the U.S. economy beginning to pick up in ways that weren’t evident in mid-2017.

The survey showed the perceived balance of risks to the outlook for inflation and growth shifting noticeably higher, with 63 percent of those surveyed now seeing risks tilted to the upside. That means they think it’s more likely that growth and inflation will exceed the Fed’s expectations than fall short. In the September poll, just 25 percent saw risks tilted to the upside.

That balance was tilted to the upside in a March survey, but shifted to “roughly balanced,” and slightly to the downside, after inflation readings fell below expectations for several months beginning in March.

The Fed’s preferred gauge of inflation, after excluding food and energy, fell as low as 1.3 percent in August, though inched back to 1.4 percent in October. It’s been below the Fed’s 2 percent target for most of the past five years. (SD-Agencies)