Economists see there would be either one more 25 basis point rate hike from the Fed or that the central bank was done with raising rates.
In the new environment of bank fragility highlighted by the sudden collapse of Silicon Valley Bank, economists attending a conference in Washington DC said they see the Federal Reserve hiking interest rates one more time before stopping in the current cycle. Others said the Fed might be done with monetary tightening.
“One more rate hike makes sense, especially if the financial crisis isn’t proliferating,” said Kathy Bostjancic, chief economist at Nationwide, in an interview on the sidelines of the National Association for Business Economics event. “We are expecting the Fed to hike one more time in May, based on the assumption that the banking situation we’re seeing right now remains fairly contained,” Boussour said, in an interview.
Bostjancic sees over 3 million workers losing their jobs, with the peak unemployment rate of 5.5%. She called this a “softish landing.”Boussour was more optimistic on inflation, seeing heading PCE inflation below 3% by the end of the year.In an interview, she said that she was worried the credit tightening from the bank stress “could sneak up on us.”
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