ARLINGTON, Va.—How much will the Federal Reserve raise rates in 2016?
That’s an important question CUs are considering as they plan their pricing strategies at the start of the year. NAFCU Chief Economist Curt Long sees the Fed raising rates by one percentage point during all of 2016.
“Now that liftoff is behind us, the question on everyone’s mind is how quickly rates will normalize,” said Long. “The Fed appears to be eyeing four quarter-point rate increases in 2016, but that depends on a lot of factors falling into place. The minutes (from the Federal Open Market Committee’s December meeting) indicated that the committee is somewhat less pessimistic about the possibility of slow growth abroad and the threat that might pose to the U.S. than many observers. As for inflation, there appears to be a growing divergence of views about risks to the Fed’s 2% target from lower oil prices and a stronger dollar."