The FOMC meets over the next 2 days with a policy decision tomorrow.
The markets are telling the Fed to raise – expectations in the futures market are pricing a 98% chance for a rate hike.
This would be the 4th hike in the past 18 months. Slowly the Fed is taking away the punch bowl. We will be at a 1% Fed Funds rate – last time we saw that was 2008.
Speculative juices continue to flow in the markets, unemployment is at near record lows and GDP growth remains positive.
However, recent data does show a slowing economy and may give the Fed pause as to whether to hike again this year. Loan growth has home to a near halt and inflation data has also shown a decline.
The Fed also must deal with unwinding its balance sheet from the days of billions of bond purchases. Look for Yellen to continue to provide plenty of guidance and assurances that the Fed can manage through this.
Yellen holds a press conference tomorrow afternoon.
Please reach out to your advisor if you would like to discuss further. 301-543-6000.