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Economists Join Chorus Predicting Fed Rate Hike in December

  • By Ira Apfel
  • Published: 12/7/2015
fedreserveratesA consensus of bank economists believe the Federal Reserve will hike interest rates 25 basis points when the FOMC meets on December 16. The economists made their predictions as part of AFP Exchange’s annual “Outlook” issue, to be published later this month, but before solid November economic numbers were released last week.

“We expect the Fed to raise the target range for the federal funds rate 25 basis points at the December 16 policy meeting,” said HSBC Chief Economist Kevin R. Logan.

RBC economist Josh Nye went even further. “We expect the fed funds rate will be hiked by 25 basis points per quarter in 2016 following an initial move to tighten in December 2015,” he said.

Added J.P. Morgan Chief U.S. Economist Michael Feroli: “The Fed will raise rates in December and about once a quarter over the course of next year, and inflation will gradually move closer to the Fed’s 2 percent objective,” he said.

Some economists told AFP that an increase could hurt the economy’s moderate growth. “We firmly believe there are consequences to the Fed raising rates: A strengthening U.S. dollar should slow domestic GDP growth and lower inflation,” said Paul Mortimer-Lee, BNP Paribas Global Head of Market Economics. “With GDP growth likely to run 1.8 percent to 2.0 percent, we think the risks are skewed to the downside.”

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