WASHINGTON: Chicago Federal Reserve President Charles Evans has hinted that an interest rate hike from the US central bank could soon be on the way but rates are likely to remain low for “some time”. Addressing a CFA Society lunch event in Auckland today, Evans said he was expecting “sound” growth in the US economy and further improvements in the jobs market.
The Fed raised its target range for federal funds to 0.25 per cent to 0.5 per cent in December 2015 – its first hike since 2008 – but has refrained from further increases since then. After his speech, Evans told reporters that he “would be fine” with the Fed raising rates once this year, most likely in December. “I have a forecast where [the economy] is going to continue to improve so on that basis of that I do think there will be a rate increase,” he said.
Low rates have been contributing to a bull run in equity markets and investors have been on edge over when the next Fed hike may take place. Traders are currently pricing a 63 per cent chance of the central bank raising rates in December, according to Reuters. Evans said that after a weak first half of 2016 he expected real GDP growth in the US to improve in the second half and to average just over 2 per cent over the next three years. US consumers were the “linchpin” of his forecast.
