As widely expected, the Fed hiked interest rates by 25bp today, taking the fed funds target range to between 1.25% and 1.50%. Despite factoring in the imminent fiscal stimulus into their GDP growth projections for 2018, however, officials still anticipate only three more rate hikes next year. In contrast, we suspect that a slightly stronger rebound in inflation next year will ultimately persuade the Fed to hike rate four times in 2018.
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