Fed rate hike on route despite Trump, says SIFMA
13 December 2016 New York
Image: Shutterstock
A long-awaited US interest rate hike is highly likely to come from this week’s Federal Reserve meeting, according to a Securities Industry and Financial Markets Association (SIFMA) roundtable.
All but one participant at the SIFMA roundtable of economists expect the hike to finally come, almost a year to the day since the last rate increase back in December 2015.
It was widely expected last year that there would be four rate hikes in 2016, but a series of political and economic upheavals, such as China's economic woes, Brexit and the victory of Donald Trump in the US presidential election, repeatedly blindsided economists and scuppered any attempts at long-term fiscal planning.
Now the dust has settled in the US, SIFMA’s roundtable participants stated they did not expect the looming Trump presidency to delay a rate hike any further, although a handful admitted they would wait to see how the markets reacted.
Looking ahead into 2017, three quarters of those questioned expected two further increases in the coming year.
A few respondents noted that the composition of the board of governors would be influential, stating: “[President] Trump will pick as many as five Federal Reserve governors by the end of 2018.”
The majority of respondents predicted significant regulatory and tax reforms to be on the horizon under a Trump-led regime, but 94 percent of respondents admitted that Trump also increased fiscal policy uncertainty,
Prior to the modest December 2015 rate increase, the Fed had not exercised its powers on interest rates since 2006.
All but one participant at the SIFMA roundtable of economists expect the hike to finally come, almost a year to the day since the last rate increase back in December 2015.
It was widely expected last year that there would be four rate hikes in 2016, but a series of political and economic upheavals, such as China's economic woes, Brexit and the victory of Donald Trump in the US presidential election, repeatedly blindsided economists and scuppered any attempts at long-term fiscal planning.
Now the dust has settled in the US, SIFMA’s roundtable participants stated they did not expect the looming Trump presidency to delay a rate hike any further, although a handful admitted they would wait to see how the markets reacted.
Looking ahead into 2017, three quarters of those questioned expected two further increases in the coming year.
A few respondents noted that the composition of the board of governors would be influential, stating: “[President] Trump will pick as many as five Federal Reserve governors by the end of 2018.”
The majority of respondents predicted significant regulatory and tax reforms to be on the horizon under a Trump-led regime, but 94 percent of respondents admitted that Trump also increased fiscal policy uncertainty,
Prior to the modest December 2015 rate increase, the Fed had not exercised its powers on interest rates since 2006.
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