WASHINGTON: The Federal Reserve’s plans to continue raising interest rates next year were met with more scepticism on Wall Street on Monday, with futures traders betting on a pause and one major bank partially walking back a hawkish prediction.
The US central bank is still seen raising rates a notch next week in a nod to a hot labour market and economy running well above potential even as inflation remains at target. Yet two volatile months in financial markets and signs of an overseas slowdown have raised doubts the Fed can carry through with the three rate hikes its officials have predicted for 2019.
The sharp tightening of financial conditions convinced Goldman Sachs’ chief economist that the US central bank is now more likely to pause its rate hikes in March, before continuing with three more hikes later in 2019. Goldman had previously predicted four rate hikes next year, far more than that implied by financial markets. — Reuters
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