When will the Fed raise rates? Never:

Bond Market Convinced Fed Inflation Goal Elusive This Decade

By Daniel Kruger and Cordell Eddings Bloomberg. Oct 14, 2014 9:09 AM ET

Photographer: Sam Hodgson/Bloomberg

Charles Plosser, president of the Federal Reserve Bank of Philadelphia.

When it comes to spurring inflation in the U.S. economy, the bond market is becoming convinced that the Federal Reserve has almost no chance of achieving its 2 percent target before the end of the decade. 

Inflation expectations have plummeted in the past three months, with yields of Treasuries (BUSY) implying consumer prices will rise an average 1.5 percent annually through the third quarter of 2019. In the past decade, those predictions have come within 0.1 percentage point of the actual rate of price increases in the following five years, data compiled by Bloomberg show.

Even after the Fed inundated the economy with more than $3.5 trillion since 2008, bond traders are showing little fear of inflation. That may help influence U.S. monetary policy and make it harder for Fed officials to raise interest rates from close to zero as global growth weakens and the International Monetary Fund points to disinflation as a more imminent concern.

“The longer inflation rates stay below their targets, the longer the Fed’s going to stay on hold,” Gregory Whiteley, a money manager at Los Angeles-based DoubleLine Capital LP, which oversees $56 billion, said by telephone yesterday. “The burden of proof is more on the hawks and the people arguing for a rise in rates. They’re the people who have to make the case.”