Despite the more hawkish language in last week’s FOMC statement, the GDP data have significantly reduced the chances of a near-term rate hike. The economy has been growing at around 1% annualised for almost a year now and we suspect that Fed officials will want to see clear signs of an acceleration before they green light the next rate hike. That would appear to rule out a September rate rise, since the third-quarter GDP data won’t be available until October. Accordingly, we now anticipate only one single rate hike this year in December, taking the fed funds target range to between 0.50% and 0.75%. Furthermore, we also now forecast that the target range will be 1.50% to 1.75% at end-2017.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services