U.S. Fed likely to raise rates in December, three rate hikes likely in 2018

During its November meeting, the U.S. Federal Reserve kept its policy and forward guidance unchanged after the announcement of the balance sheet reduction at its September meeting. According to a Nordea Bank research report, the U.S. Fed is expected to hike its rate next in December, which is in line with the Fed’s recent dot plot from September.

For the next year, the central bank is expected to hike its rate three times, but due to the tight labor market and recent solid activity data, there are some upside risk to this estimate. Given full employment, even a moderate fiscal stimulus would exert pressure on the Fed to tighten monetary policy in 2018, added Nordea Bank.

During its November meeting the FOMC gave a bit more positive assessment of growth, reflecting recent generally encouraging economic data. Meanwhile, despite the disappointing September inflation report, the FOMC did not downgrade its inflation assessment or outlook, reflecting widely the stable year-on-year inflation and additional decline in the jobless rate below the NAIRU.

At 19:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was neutral at -22.5287. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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