The Federal Reserve raised interest rates on Wednesday and forecast at least two more hikes for 2018, signaling growing confidence U.S. tax cuts and government spending will boost the economy and inflation and lead to more aggressive future tightening.
Policymakers predicted rates would rise three times next year and two times in 2020, a further indication of confidence in the economy.
STEPHEN MASSOCCA, MANAGING DIRECTOR AT WEDBUSH SECURITIES IN SAN FRANCISCO:
“We’re still below the all time high. The 30 year is also below its high. I don’t think there’s any new news here. It was a quarter of a point increase. We’re taking about 3 increases this year. I don’t know how anybody could be surprised.”
“If some economic numbers were really hot you might see four rate hikes this year. If employment was hot or inflation. I don’t think that’s going to happen. I think Powell is a don’t upset the apple cart guy.”
“My view is they’ll go to 2-2.25 percent and see what the reaction is. If we had 2-3 inflation reports of 3-4 percent the Fed would start acting more aggressively.”
THOMAS MARTIN, SENIOR PORTFOLIO MANAGER AT GLOBALT INVESTMENTS IN ATLANTA, GEORGIA:
“Everybody expected the rate increase but there was some question if it would go to three rates to four. It stayed flat at three raises for now. The reason was the Fed statement that economic activity has been moderating since the last time they talked about it. There is a moderation so they are not going to raise it to four at this time.
RANDY FREDERICK, VICE PRESIDENT OF TRADING AND DERIVATIVES, CHARLES SCHWAB, AUSTIN, TEXAS
“There was nothing real shocking here. I think the market shooting up and back down is typical. We often see the market make a quick knee jerk reaction and it’s often in the wrong direction.
PRAVEEN KORAPATY, GLOBAL HEAD OF INTEREST RATE STRATEGY, CREDIT SUISSE IN NEW YORK:
“It was a little more dovish than our economists were expecting. But I would say overall if I looked at it separate from expectations, I would say on course – not too hawkish, not too dovish.
“We continue to think they’re on the path for four hikes this year even though the median dots didn’t move. I think we were one dot away from the median for 2018 moving up to four hikes. So I think four hikes should be people’s’ base case.”
JIM PAULSEN, CHIEF INVESTMENT STRATEGIST, THE LEUTHOLD GROUP, MINNEAPOLIS
“That’s a Fed that really feels good about the economy, not only this year but into next year. That came through in rate hikes they put into play in 2019 and 2020. And they were only one vote away from a fourth rate hike in2018. That tells you four hikes is very much on the table for 2018.”
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