Cairo – Mubasher: The U.S. Federal Reserve is seen hiking policy rates three or four times next year, said Bank of America Merrill Lynch.
“Our base case of three hikes assumes that there is a soft spot in the markets or the economy at some point in the year ahead, causing the Fed to pause for more than one meeting. On the other hand, if the economy consistently matches the Fed’s forecasts we would expect four hikes. Looking further out, we continue to expect four hikes in 2017, a peak of about 3.25% in the funds rate and a very slow winding down of the Fed’s balance sheet starting in early 2017,” said the global bank.
The Federal Reserve voted unanimously on Wednesday to raise interest rates by a quarter point, marking the first increase in more than nine years.
The bank raised its fed funds rate to a range of 0.25% to 0.5%, ending an unprecedented seven-year run of near-zero interest rates. The board also raised the discount rate to 1% from 0.75%.
