NEW YORK (CNNMoney.com) -- Economists are evenly split on whether the Federal Reserve's current policies are helping the economy. But they're in agreement on one point -- the Fed won't be raising interest rates anytime soon.
A CNNMoney.com exclusive survey showed that economists expect the Fed funds rate -- the central bank's key overnight interest rate used as a benchmark for a wide range of loans -- to remain near 0% for at least another year.
Only seven out of 25 participants are forecasting a rate hike in the next twelve months, and most of those expect it to come in the final three months of 2011. Another nine expect the next rate increase to come in the first quarter of 2012, while eight more are expecting a hike later that year.
Just one economist, John Ryding of RDQ Economics, predicts that the Fed will keep rates near zero all the way into 2013. He believes unemployment will stay above 8% until the following year, prompting the Fed to keep rates low.
Persistently high unemployment is one reason the economists think rates will remain low. While their forecasts for growth are improving, unemployment is expected to stay at about 9% through the end of 2011. But low inflation pressures will also allow the Fed to keep the low rates in place. The economists believe prices will rise only 1.7% over the next 12 months.
The Fed cut the fed funds rate to near 0% for the first time in its history in December 2008 in response to the economic meltdown. Since lowering rates is the typical tool the central bank uses to spur economic growth, it has had to find other means to encourage growth since then.
In November of this year, the Fed announced a plan to buy $600 billion more in long-term Treasuries to try and spur growth. The move prompted widespread attacks from critics who believe the Fed risks devaluing the dollar, a return of high inflation and creating asset bubbles.
But the survey showed disagreement among the economists, with 12 out of 25 expecting no significant economic impact from the Fed's controversial policy.
Another 11 believed the policy would boost growth, although two of those said it would be at the price of high inflation.
But even some of those who expect the Fed's policy to work still have their doubts about the move.
"Growth ... is likely to be later than we hope -- in the second half of 2011 and into 2012," said David Berson of PMI Group. "Unfortunately, we won't need the boost then."
Almost all the economists think the Fed's current plan will run its course, as 22 of the 25 expect the central bank to purchase the full $600 billion in Treasuries. Just two economists surveyed predict that the Fed will pull the plug early, although a third believes that it should.
And despite some ambiguous comments from Fed Chairman Ben Bernanke on 60 Minutes earlier this month, the economists don't expect another round of purchases after this one, with only one predicting that outcome.
Stocks go way way down. And then back up. It's enough to make your head spin. But what you need to do is keep a level head and not panic. This doesn't look like a bear market. More
Several currencies have plummeted this year. That's bad in the short term. Long term it could be a good thing though. More
Millennials are looking for a buying opportunity and the current stock market gyrations seems to offer that. Many are jumping in. More