US Economics

Fed Watch

6 December, 2017

Fiscal stimulus will prompt faster tightening in 2018

At this stage, a 25bp rate hike at next week’s FOMC meeting is all-but guaranteed. Of more interest will be whether the increased prospect of a near-term fiscal stimulus prompts officials to revise up their projections for GDP growth, inflation and interest rates. Regardless, we still expect a rebound in inflation to convince the Fed to raise rates an aboveconsensus four times in 2018.

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