What Might Derail the Fed's Rate Hike Express?
April’s strong rebound in job growth, affirmed MIG’s view that the Fed is on track to deliver two additional rate hikes this year. What might cause them to change plans? What could derail the Fed’s “Rate Hike Express�
1.) There is a near-term risk that inflation continues its decline and moves further below the Fed’s 2% objective. This risk has elevated recently due to sharply falling prices for commodities like oil and iron ore. These disinflationary impulses will likely drag on US inflation measures in coming months.
2.) Though labor markets appear strong now, there is some downside risk to job growth in the latter half of the year. In the late stages of an economic expansion, the pace of job growth typically moderates. With the current US expansion in the late innings, we expect job growth to slow down - possibly as soon as this summer.Â
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