Tim Duy, Columnist

Expect the Fed to Stand By Its 2018 Outlook

Financial markets see that solid growth will prompt the central bank to stick to three rate hikes despite low inflation.

December 11, 2017 at 1:00 PM UTC

By Tim Duy

Tim Duy is a professor of practice and senior director of the Oregon Economic Forum at the University of Oregon and the author of Tim Duy's Fed Watch.

Jerome Powell will be in charge.
Photographer: Alex Wong/Getty Images

Provide news feedback or report an error

Site feedback:

Take our Survey

This article is for subscribers only.

As the Federal Reserve prepares to hike interest rates at this week’s Open-Market Committee meeting, market participants are bidding up short-term rates -- moving toward the Fed expectations of more increases in 2018. That move could continue when the central bank reaffirms its commitment to further tightening next year.

Opposing forces challenge Fed policy makers as they chart a path for next year. Inflation disappointed in 2017, while unemployment forecasts proved too pessimistic. This combination puzzled the Fed, yet officials remained committed to their expectation of three 25 basis-point rate hikes. They sense a need to stay ahead of any potential overheating of the economy.