Latest Comments From Officials, Market Data Mean Rates Unlikely To Be Altered Before December
The latest comments from Federal Reserve officials, along with broad economic data, is leading analysts to speculate that the Federal Reserve is unlikely to adjust interest rates during its November meeting, but will wait until December at the earliest to raise rates. In a front-page story, the Wall Street Journal anticipates that Federal Reserve officials will hold off on raising interest rates at their November meeting and keep their focus on an increase in their final meeting of the year on Dec.13-14. The challenge they face, according to the Journal, is how strongly the November policy statement should signal the expected move in December. With market expectations that an increase is coming by then, Fed officials may not need to send a strong new signal, which could leave the November statement much like September’s. Bloomberg News reports the Fed is “inclined to raise interest rates higher than otherwise if the next president pursues a more stimulative fiscal policy.” The piece explains that American central bankers “say they would welcome such a step as shifting some onus for supporting the economy away from the Fed,” but suggest “they would offset the extra demand that a bigger budget deficit would spur by making monetary policy less stimulative.” This is because, with the economy “already operating close to capacity, it’s not in need of an added boost right now.”
According to comments from Chicago Fed President Charles Evans, MarketWatch reports the Fed is “likely to raise short-term interest rates by three quarter-point moves between now and the end of 2017.” Evans told reporters following a speech in Chicago, “I suppose I’ve got, hard to say, three [interest-rate hikes] priced in by the end of next year.” Evans also argued the central bank “should tie the pace of future interest-rate hikes to progress on inflation.” Meanwhile, Reuters reports St. Louis Fed President James Bullard said “that a single U.S. interest rate rise would be all that was necessary for the time being, repeating comments he had made recently.”
What This Means For Small Businesses
Small business owners have been closely watching for signals that the economy is improving. One of the strongest indicators of economic growth would be Federal Reserve action on interest rates. Until such action occurs, the future of the economy, and business conditions for many small business owners, remains in doubt.
Additional Reading
MNI News and Reuters also report Evans’ comments on rate hikes.
Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.
