WASHINGTON -- Many U.S. economists expect the Federal Reserve to begin to slow bond purchases before the end of the year, perhaps starting in September.
A majority also say the Fed will raise short-term interest rates before the end of 2014, according to a twice-a-year survey by the National Association of Business Economists conducted between July 18 and Aug. 5.
The latest NABE poll reflects a hardening consensus among economists that the central bank will act soon to curtail monthly purchases of $85 billion in government and mortgage-related debt. The Fed has been buying the bonds to keep interest rates low to stoke U.S. growth.
With the economy seemingly on a steady -- if slow -- upward track, Fed officials have signaled that they plan to start tapering their bond purchases soon.
The timing of the first reductions is yet to be determined. A good employment report for August may prompt the Fed to scale back its purchases, while a poor number may cause the central bank to wait.
About 10 percent of economists say the Fed will begin its retreat in the third quarter, 40 percent point to the fourth quarter and 27 percent say the central bank will hold off to the first quarter of 2014, according to the poll.
Nearly three-quarters of the 220 business economists surveyed say the Fed's bond purchases, known as quantitative easing, have been a success. And more than half say current central-bank monetary policy is "about right," the NABE said.
Economists were more divided over the propriety of the Fed linking the short-term federal funds interest rate to 6.5 percent for the national unemployment rate, which now stands at 7.4 percent. Fewer than half of the poll respondents say the Fed should stick to that goal.
More than 60 percent economists polled say immigration reform would boost U.S. growth in the long run, while health care reform is expected to raise federal costs and potentially added to the nation's deficits.
To improve the country's financial health, some economists advocate spending cuts, a smaller number back tax increases and even more favor a combination. Others also argue for policies to stimulate growth.
Most say the government needs to do a better job to contain the cost of health care, Medicaid and Medicare. Fiscal policy and frequent political standoffs, economists say, are "holding the economy back now."