What can we expect from FED in 2017?

The Fed has finally delivered a second rate hike a year after the last one in this cycle.
 

“What’s more interesting is their guidance on where interest rates might go from here. This time last year the Fed turned out to be wildly off mark in what they were predicting. But this year there are reasons for thinking the Fed’s guidance is more realistic. The economy is in a more advanced stage of recovery and market pricing reflects this. We can expect rates to slowly climb through next year and beyond.”

“Trump is the big known unknown. The Fed is currently agnostic about the impact his policies will have. But that’s partly because neither they, or any of the rest of us, knows what they’ll be. If there is a large fiscal stimulus then this will almost certainly create inflationary pressure that the Fed will have to fight by raising rates. It’s far from clear how big any stimulus will be and what impact it will have. The Fed is as much in the dark about this as the rest of us.”

Luke Bartholomew
Investment Manager – Aberdeen Asset Management