Do Not Expect Too Many Rate Hikes: CreditSights 2016 Outlook

Hamstrung with slow growth, a failure of inflation to touch 2% as fast as current projections, a CreditSights analyst predicts fewer than expected rates hikes by the Federal Reserve in 2016. Yogesh Chandarana of CreditSights notes in his Jan. 15 report titled: “2016 Outlook: Rates Up From Here But Not By Much” that historically the Fed has sought to maintain an independent, nonpartisan stance in a presidential election year, and hence, there is no “prohibition” on interest rate increases in election years.

FOMC projecting four rate hikes in 2016

Chandarana points out that each year, the Fed has been painting an optimistic economic outlook, only to be scaled back as the months go by. For instance, the analyst points out...