This week, the Federal Reserve alluded to a rate hike in December, despite this spring's low inflation readings, and to a fear that central bankers may be unprepared for the next economic downturn.
Today, short-term interest rates are just above 1 percent, and the Fed doesn’t anticipate a rise above 3 percent until the end of 2020. MarketWatch reports that the Fed is following an inflation targeting approach, with the hope of getting inflation up to 2 percent, even though inflation has stayed lower than that since the end of the Great Recession.
“The economy is chugging along. It is not brilliant, but it is doing better than we thought it would after the hurricanes,” said Terry Sheehan, an economist at Oxford Economics. “It is not untenable to say the Fed needs to remove another increment of accommodation.”
