Yesterday, Bloomberg’s World Interest Rate Probability reflected a 100% probability of a hike next week.
The Federal Open Market Committee is expected to increase its benchmark fed funds rate by 25 basis points to a range of 0.75%-1%.
This is after the U.S. Economy added 298,000 private payrolls in February, the highest monthly gain since January 2006.
Even Fed Chief Janet Yellen wants rates up. Last week she said, “”At our meeting later this month, the committee will evaluate whether employment and inflation are continuing to evolve in line with our expectations, in which case a further adjustment of the federal funds rate would likely be appropriate.”
There is a very real possibility that this rate hike, the third, will slow GDP growth and be the pin that pops the current credit bubble. Rates will go up, the housing market will slow down, stock-buy-backs and capex spending will also slow. Volatility will increase.
All the best,
Bubble & Bust Report