Increase In Rates Appearing More Likely

ARLINGTON, Va.—Federal Reserve Board Gov. Lael Brainard's recent comments on the federal funds target rate indicate a June rate hike is likely, said NAFCU Chief Economist and Director of Research Curt Long.
"Governor Brainard is seen as one of the more dovish members of the committee, and her comments confirm that a consensus has formed around a June rate hike," said Long. "But looking into the second half of the year, it is clear that recent signs of flagging inflation, if they persist, will be an obstacle for further policy tightening."
During remarks at the New York Association for Business Economics, Brainard said "it would be appropriate soon to see the federal funds rate moving closer to its neutral level" and that normalization is "likely to be well underway before too long."
Brainard also noted that inflation may be slowing, which she said "may lead me to reassess the expected path of the federal funds rate in the future, although it is premature to make that call today," NAFCU reported.
The Federal Open Market Committee's next meeting is set for June 13-14. The committee’s revised projections are three quarter-point rate hikes in 2017, three in 2018 and three to four in 2019, NAFCU noted.