Fed Watchers See Risks in Rate Plan

Many economists believe the Federal Reserve risks making a big mistake if it sticks to its recent guidance about keeping interest rates super low for the next three years.

The Fed said last month that it expected to keep short-term interest rates near zero until at least late 2014 to bolster the slow recovery. Among 49 economists who participated in the latest monthly Wall Street Journal survey, the vast majority—33 respondents—said moving to raise rates then would be too late. Just three said it would be too soon, 11 said it would be right on time and two didn’t answer.

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