Fed to hike rates, move rate hikes to four this year - Barclays

The Barclays Research Team offer a brief preview of today’s FOMC rate decision that will be announced at 1800 GMT.

Key Quotes:

“We expect a 25bp increase in the target range for the federal funds rate when the FOMC meets next week.

There have been important developments since the committee last submitted forecasts in December, namely, the implementation of the Tax Cuts and Jobs Act and the approval of the Bipartisan Budget Act.

In light of the sizeable fiscal stimulus, the median committee member is likely to revise growth higher, particularly for 2019.

In addition, we expect modestly stronger inflation and lower unemployment rate projections.

We expect an unchanged median funds rate for 2018 and 20bp increases in the median funds rate in 2019 and 2020. We see the average funds rate rising 10-20bp across each of the three years.

The committee, in our view, is more likely to move to four hikes this year at the June meeting, when incoming data should confirm that fiscal stimulus is having the anticipated effects.”