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Does the Fed’s “Hawkish” Mentality Guarantee Rate Hikes?

October 5, 2017
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It appears that stocks aren’t the only thing that look like they are set to continue going up. The Fed seems to be going ahead with its plan to raise interest rates over the coming year, and there is little to stop it. Marketwatch reports:

“With the dollar index at near two-month highs, it looks like the market is prepared to believe that the [Fed] committee remains committed to higher rates, even if they think current forecasts are a bit on the hawkish side,” said Chris Beauchamp, chief market analyst at IG.

The rising dollar has played a role in solidifying the Fed’s plan to raise the rates, but so has its promise to offload it balance-sheet.

In addition, it appears that the Fed is quite happy with continuing interest rate hikes even if inflation stagnates. Reuters (Via CNBC) reports that:

San Francisco Fed President John Williams said he does not need to see inflation move higher to support another interest rate increase this year as long as other economic data points to continued economic strength.

At this rate it looks like it would take a big shake up of either the markets or the President’s tax plan to change the Fed’s plans.

Interest rates remain quite low and have been expected to rise for sometime which could also play into the Fed standing by its decision.

To read Marketwatch’s article on the markets and Fed plans, click here.

To read Reuters’ questioning of John Williams, click here.

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