Mubasher: An expected interest rate rise by the United States Federal Reserve this week will open the door for further increases in the New Year, according to a report by the Financial Times.
Economists believe this comes as tax cuts are set to help underpin an improving outlook for the American economy growth.
On Wednesday, the Federal Reserve is set to increase its target range to 1.25%-1.5%, in one of the last major decisions it will take under the leadership of chair Janet Yellen, whose term expires in February and will be replaced by Jerome Powell.
The Federal Reserve will also be taking into account the tax reforms that will soon be finally passed by Congress, in its forecasts for gross domestic product (GDP).
The Financial Times noted that analyst forecasts indicate the Republican tax cuts will have a modest impact on economic growth, with Goldman Sachs assuming a contribution of 0.3% in 2018 and 2019.
However, the tax cuts will likely support more increases in interest rates, with the US economy close to or even beyond full employment with inflation showing tentative signs of firming, while the global economic growth is also strengthen.
September forecasts showed that the Fed expects three more rate increases in 2018, and it remains to be seen whether it will maintain this view or expect more interest hikes in the upcoming year.
The Federal Reserve already rose interest rates twice this year, with the third time highly expected.
Experts previously expected three or four interest hikes by the Fed in 2018.
