Fed is anticipating to approve another fund rate rise by another quarter point on Wednesday, even though the economy is not at a peak. Amid an improving economy - in most sectors - raising rates for the second time this year will be another step towards normalisation.
The CME FedWatch tool estimates, by a probability of 95.8%, that the U.S. central bank will make its fourth tightening action since the financial crisis, with an increase of its federal fund’s target rate range by a quarter basis point between 1.00% and 1.25%. The current target range is between 0.75% and 1.00% since March 15th, 2017.
Economy Is Performing Well, Even Though It Is Not at a Peak
The world’s biggest economy grows at a sustainable pace and since the last quarter of 2016 is expanding more or at a similar pace to well-developed economies like Europe and Japan, even though it is not currently at one of its stronger periods. Following a peak during the first quarter of 2015, at 3.3% annual expansion, the economy was slowing down gradually, to reach 1.3% in the second quarter of 2016. As political uncertainty prevailed in the last quarter of 2016 and the first half of 2017, before and after the U.S. presidential election on November 8th, U.S. economy kept a strong annual recovery rate of 2%, mostly driven by domestic demand.
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