By Ann Saphir
SAN FRANCISCO (Reuters) - The Federal Reserve remains poised to start raising U.S. interest rates by mid-2015, according to a Reuters poll of economists, but at a pace that's well short of what Fed officials themselves say would be appropriate.
The latest poll, conducted Nov. 7-13, showed that economists also expect the job market to continue to strengthen and inflation to trend higher.
Twenty-four of 43 economists polled by Reuters said the Fed will likely start raising short-term interest rates in June of next year.
Seven expected an earlier start, while 11 believed the first rise will come in September or later.
"If we still get softer, weaker inflation numbers, the markets are certainly going to wonder - is the Fed in position to raise rates in mid-2015 like they've been saying," said Sam Bullard, senior economist at Wells Fargo, who predicts a June 2015 rate rise.
If there is no pickup in inflation, and particularly in wages, "that's certainly going to be ammunition for Chair (Janet) Yellen and the doves there for rates to continue where they are for a little bit longer."
The Fed has kept rates near zero since December 2008, and last month reiterated a promise to keep them there for a "considerable time." But it said rates would rise sooner if the economy does better than expected, and later if it does worse.
Traders are mostly pricing in a September rate hike, with trading in fed fund futures implying they see just a 22 percent chance of it happening in June 2015.
Most comments and forecasts by Fed officials have suggested the first rate rise will come around the middle of next year.
Asked whether bond and rate markets were mis-pricing the likely series of rate hikes once the Fed begins tightening, 22 of 30 economists said 'yes,' with a large majority saying they were under-pricing that rate path.
Economists, for their part, see a shallower rate-hike trajectory than Fed officials.
The median forecast of 38 economists for the federal funds rate at the end of 2016 was 2.20 percent, compared with policymakers' median forecast of 2.88 percent. By the end of 2017, 31 economists projected a median federal funds rate of 3.30 percent; policymakers' median forecast was 3.75 percent.
Top Wall Street firms polled by Reuters last week saw a trajectory midway between that of the broader group of economists in the latest survey, and Fed policymakers [ID: nL1N0SX2HS]
The poll follows a government report that showed a decline in the U.S. jobless rate to 5.8 percent in October, lending weight to the Fed's assertion at its most recent meeting that slack in the labor market is diminishing.
Economists predicted gross domestic product growth will average 2.2 percent in 2014, rising to 3 percent in 2015 and back down to 2.8 percent in 2016.
The unemployment rate is seen dropping to an average of 5.5 percent next year and 5.3 percent in 2016, while core CPI inflation, a key concern for the Fed, is expected to rise to 1.9 percent in 2015 and 2.2 percent in 2016.
CPI often runs about half a percentage point higher than the Fed's preferred gauge of inflation, by which it measures progress toward a 2-percent target.
(For other stories from the poll see)
(Polling by Ashrith Doddi and Siddharth Iyer; Editing by Ross Finley and Bernadette Baum)
