A growing number of fund managers worldwide expect the US Federal Reserve to up interest rates in the second quarter of calendar year 2015, the Bank of America Merrill lynch (BofA ML) global fund manager survey has found.
Nearly half (48%) of the fund managers polled in September believe the US central bank will introduce what would be its first rate tightening in nine years in spring next year. Last month, about 38% of the fund managers expected a rate cut in the Q2CY15.
The survey comes as the Fed gets ready to kick off a two-day policy meeting on Tuesday, amid fears it could conclude the meeting by signalling a rate hike sooner than previously expected.
In a second part of the survey, fund managers saw increasing exposure toward eurozone equities following a rate cut by the European Central Bank (ECB) at its September meeting. Investors expect a further cut in interest rates by the ECB and said it would start buying asset-backed securities, fund managers noted in European survey.
A net 18% of the respondents are now overweight on euro-area stocks compared with 13% in the previous month. A large chunk of the respondents expect the ECB to begin on a full-scale quantitative-easing (QE) plan by the end of 2014, with 42% believing in QE now compared with 32% in August.