Nov 20 (Reuters) - Wall Street dealers expect the Federal Reserve to start raising U.S. interest rates next June, but so slowly that the rate would still be below 3 percent in the first half of 2017, they told the New York Fed in a survey released on Thursday.
The survey was conducted from Oct. 16 to Oct. 20, just ahead of the Fed's month-end policy-setting meeting. September's survey had showed dealers expected a first rate rise between the second and third quarters of 2015, and for rates to rise at a slightly steeper pace, to hit 3 percent in the first half of 2017.
The Fed has kept benchmark rates near zero since December 2008.
The survey also showed dealers expressed concerns about a cap on the Fed's reverse repurchase facility, one of the new tools it will use to put a floor under rates when it starts to raise them.
The cap, set in September at $300 billion daily, could "compromise the facility's effectiveness in providing a floor under short-term interest rates," some dealers told the Fed. (Reporting by Ann Saphir and Jonathan Spicer; Editing by James Dalgleish)