The U.S. economy is poised to deliver on the Federal Reserve’s economic forecast for this year. That means a baseline outlook for three interest-rate increases remains in play -- though not the way market may be anticipating. Think of it as two rate hikes, one each in June and December, with an option for a third in September.
The data continue to be generally supportive of the economic forecasts outlined in the Fed’s December Summary of Economic Projections. The first employment report of the year set the stage with a solid jobs gain but an uptick in unemployment. The latter indicates that there remains slack in the labor market, and Fed Chair Janet Yellen would like to let the economy run strong enough to squeeze it out.