Explaining ‘gradual’ Lockhart said Fed likely to hike “at every other meeting”

By FXStreet FXStreet (Mumbai) – The U.S. Federal Reserve raised the interest rates from its record low levels for the first time since 2006. On 16th December the Fed finally increased the Fed funds target range by +25bps to 0.25%-0.5%. Speculations run high as markets try and gauge the number of subsequent rate hikes that can be expected in 2016.

The Fed stated the subsequent rate hikes will be gradual and dependent on the incoming economic data. The FOMC will raise rates by 25 bps four times in 2016. Another four rate hikes can be expected in 2017. Markets however believe that the dominant economic condition would be such that the central bank will not be able to raise rates more than two times in the next fiscal.

The question that has now arisen is what does Fed’s “gradual” actually mean. Atlanta Fed President Dennis Lockhart who voted in favor of the Fed’s interest rate hike last week, clarified that the central bank will not raise rates at every meeting. In an interview on WABE radio in Atlanta he said, “The rate of rising interest rates will be more like every other meeting.”

He further explained “Moving up gradually means not at …read more

Source:: FX Street