U.S. Fed forecasts slower interest rate increases through 2018

WASHINGTON -- Federal Reserve policymakers have slightly lowered their projections for short-term interest rates over the next three years, a sign that policymakers may move slowly after their first rate increase in seven years.

See Full Article

The Fed on Wednesday lifted its key interest rate by a quarter point to a range of 0.25 to 0.5 per cent, up from near zero for the first time since December 2008.

More Fed policymakers now expect the short-term rate will be 1.38 per cent or below at the end of 2016 than in previous projections in September. And they forecast the rate will be 2.38 per cent at the end of 2017 and 3.25 per cent at the end of 2018, both a quarter-point lower than in September, according to projections released Wednesday.

Still, the Fed's forecasts for the U.S. economy and interest rates have proven too optimistic for most of the recovery from the Great Recession. A year ago, for example, their projection for short-term rates at the end of 2016 was nearly double what it is now.

The projections show that Fed officials are coalescing around an expectation of four rate hikes next year. Still, fewer hikes are possible: Four officials project there will be just two hikes, double the number in September, and three expect three rate hikes.

Fed officials' expectations for the economy didn't change much. They project the economy will grow 2.4 per cent next year, just a tenth of a percentage point higher than in September. They also foresee unemployment will fall to 4.7 per cent by the end of next year, from its current rate of 5 per cent. That's down slightly from the previous forecast of 4.8 per cent.

While the Fed says it is confident that inflation will reach its 2 per cent target, it does not project that happening until the end of 2017, when it forecasts a 1.9 per cent inflation rate.


Latest Economic News

  • U.K. Uber drivers win case to get paid vacation, minimum wage

    Economic CTV News
    LONDON -- Uber drivers in Britain should get paid vacation days and be guaranteed a minimum wage, a tribunal said Friday, in a ruling that tests the limits of the so-called "gig economy," in which companies rely on individual to work as self-employed contractors without safety nets. Source
  • Foreign buyers greatly outnumbered by domestic investors in Toronto's condo market

    Economic CBC News
    Concerns about foreign investors snapping up real estate have dominated headlines recently, but a new report suggests domestic investors outnumber foreign buyers in the Greater Toronto Area's new condo market ten-to-one. Toronto condo research firm Urbanation says foreign buyers, whose primary residence is outside of Canada, made up only five per cent of the sales of new units in condo buildings that were under development between July and September. Source
  • Imperial Oil Q3 profit edges above $1 billion

    Economic CTV News
    CALGARY -- Imperial Oil says the sale of its gas stations helped the company achieve a $1-billion quarterly profit for the first time in more than two years. The Calgary-based oil and gas company recorded a $716-million gain, worth 84 cents per share, from the sale of its gas stations. Source
  • Johnson & Johnson to appeal $70M verdict alleging talcum powder link to ovarian cancer

    Economic CBC News
    Johnson & Johnson has faced multiple lawsuits related to allegations that its baby powder has a link to ovarian cancer — something the company strongly denies. (Matt Rourke/Associated Press) A St. Source
  • U.S. economy grew at 2.9 per cent rate in third quarter

    Economic CTV News
    WASHINGTON -- The U.S. economy grew at a 2.9 per cent rate in the July-September quarter, the strongest pace in two years, as the battered export sector rebounded and businesses finally began restocking their shelves at a faster clip. Source
  • Mortgage rule changes were 'the right thing to do,' Morneau says

    Economic CBC News
    Finance Minister Bill Morneau says recent changes to mortgage rules will keep Canada's economy secure and protect Canadians in the long run. In a speech to the Toronto Region Board of Trade, the finance minister defended the steps the government has taken since his swearing in last November. Source
  • Norbord and Louisiana-Pacific Corp. to exhange ownership Quebec of mills

    Economic CTV News
    TORONTO -- Norbord Inc. (TSX:OSB) and Louisiana-Pacific Corp. have agreed to exchange ownership of two wood panel mills in Quebec. Financial terms weren't disclosed. Louisiana-Pacific's mill in Chambord, Que., is bigger than Norbord's oriented strand board mill in Val-d'Ore, Que. Source
  • Singapore Michelin-starred food hawker to start chain

    Economic CTV News
    A Singapore street-food chef who was awarded a Michelin star this year announced Friday a partnership with a multinational culinary company to offer customers across Asia a taste of his prize-winning braised chicken dish. Chan Hon Meng announced in a joint press conference with Singapore-based Hersing Culinary, which holds the Asia franchise for the popular Tim Ho Wan chain, that the partners will collaborate on a new Singaporean restaurant before expanding across the region. Source
  • Just in time for the weekend, some grocery stores can sell wine

    Economic CBC News
    Some 70 grocery stores across Ontario can sell wine now. The province granted approval to a select group of stores earlier this fall, but Friday marks the first day the grocers can stock their shelves with vino. Source
  • Asian stocks mixed due to Wall Street gloom

    Economic CTV News
    TOKYO -- Asian shares were mixed Friday as a weaker yen sent Japan's benchmark higher, despite persisting gloom from Wall Street's recent declines. KEEPING SCORE: Japan's benchmark Nikkei 225 gained 0.6 per cent to 17,446.41 and the Shanghai Composite index inched up less than 0.1 per cent to 3,112.91. Source