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Fed to raise rate hike goal to 4 times in June: analyst

By Yonhap

Published : March 28, 2018 - 10:02

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The US central bank is expected to raise its target number of rate hikes for this year to four times from the present three at its policy meeting in June, a local securities company said Wednesday.

Last week, the US Fed raised the federal funds rate to 1.50-1.75 percent as widely expected, saying it has plans to jack up the rate two more times within the year.


Fed Chair Jerome Powell (Yonhap) Fed Chair Jerome Powell (Yonhap)

"Expectations for the Fed's four rate rises for this year are already reflected in interest rate futures," Lee Mi-seon, a researcher at Hana Financial Investment, said. "The Federal Open Market Committee will likely revise upward its target to four times at the June meeting after confirming a rebound in US inflation for the second quarter."

At the March meeting, the FOMC, the Fed's decision-making body, retained the number of this year's rate increases at three but hinted at four rate hikes this year, as expected benchmark interest rates have been upgraded for 2019 and 2020, Lee said.

"The market has not factored in the possibility that the federal funds rate may hover above 3 percent next year and in 2020, but it will reflect expectations for next year's rate increases, starting in the second half of the year," the analyst said.

Given the current business cycle, the US Fed is expected to keep its hawkish stance until the first half of next year, Lee added.

Lee joins a growing number of market experts who have predicted that the US Fed will jack up interest rates four times this year, from an earlier estimate of three, on solid economic growth and growing inflationary pressure. (Yonhap)