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Fed will make 4 rate hikes this year, economists say after latest GDP, ECI reports

Friday, Apr 27 2018
Fed will make 4 rate hikes this year, economists say after latest GDP, ECI reports

The latest economic data released by the government on Friday show inflation pressures are rising, and will lead the Federal Reserve to hike rates four times this year, one more than the three moves targeted in March, economists said. “The inflation data are flashing amber,” and justify four moves this year, said Paul Ashworth, chief U.S. economist at Capital Economics. “Everyone thinks that [4 moves]. We’re in the boring middle of consensus,” Ashworth said.

 

The consensus is still that the Fed won’t lift rates at its two-day meeting ending Wednesday. The government reported that the employment cost index, a broader measure of compensation than the monthly average hourly earnings measure, rose 0.8% in the first quarter, putting the year-on-year rate at 2.7%. “That is a new cycle high but still very slow by late-cycle standards. There is nothing much to be alarmed about here, though the data at the margin support our call for four hikes this year rather than three,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

Last modified on Friday, 22 June 2018
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