FED Rate Forecast for 2017

Our forecast for future rate hikes by the FED in 2017 depend on inflationary pressures arising from the new economic policies of Trump.  In general, inflation seems to be picking up, or we should say inflationary expectations are picking up.

Globally, things are looking up for several areas.  For example, the producer numbers for Europe are increasing.  However the picture is mixed as I see China as slowing.  In addition, the risk of a trade war within NAFTA and between the US and China especially are possible.  Of course, even the rhetoric leading up to tensions might be cause for the FED or other central banks to pause.

My expectations are for a minimum of two rate hikes, with the first being in March.  More than likely if inflationary pressures rise faster than expected, we estimate three rate hikes.  At this point, it is better to see how the new Trump policy unfolds in the next month to get more clarity.