Economists still expect two rate hikes this year

by Ryan Smith25 Apr 2016
The Federal Reserve is expected to hold interest rates steady at its meeting this week, but a Reuters poll shows most economists still expect a rate hike in June and a second before year’s end.

At its meeting last month, the Fed decided that global economic uncertainty justified pulling back on their plan for four rate hikes through 2016. The Fed suggested instead that two hikes might be justified, Reuters reported.

The latest Reuters poll shows most economists think the Fed will hold to that plan. About two thirds of economists polled by Reuters expect the Fed to raise its target federal funds rate to 0.50-0.75% in June.

None expected a rate hike at the Federal Open Market Committee’s meeting this week.

Of economists who expected a second rate hike this year, most expected the hike to come in the fourth quarter and rase rates to 0.75-1.00%, Reuters reported.

Economic growth slowed dramatically in the first quarter – not unusual in recent years, according to Reuters. However, the labor market remains strong, with jobless claims hitting their lowest level in more than 40 years last week.