Will They Or Won’t They Increase US Interest Rates?

Today is an important day for investors as it will provide a window into the economic outlook for the US economy and future interest rates increases. Our partners at NBF Economics have forecasted that the ‘Fed’ (US Federal Reserve) is seen as likely to take the Fed funds rate higher looking further down the road. NBF economics has projected their base case scenario for the target Fed funds range at year end 2019 remaining at 2.75% to 3.0%. This is more aggressive than what the Fed funds futures market is pricing in at this writing earlier in 2018 (see graph).

A recent CNBC consensus estimates a range to 2.25 to 2.50 percent and to remove language in its post-meeting statement that says it will continue with “gradual” rate increases. This may mean the US economy is slowing and no further rate increases to quell inflation concerns may occur.

As for the NBF Economic forecast, we continue to expect a US GDP growth rate of 2.3% on average in 2019 with no runaway inflation. This environment, in our view, would support further policy normalization. Enjoy a detailed discussion of the economic forecast and interest rates outlook from our partners at NBF Economics here: