Federal Reserve to Raise Interest Rates Three of Four Times in 2018

Federal Reserve Eyes Further Rate Hikes in 2018

The Federal Reserve raised its key lending rate on Wednesday, March 21; the first meeting under new Chairman Jerome Powell. The rate hike is a sign of confidence that the U.S. economy is getting strong with low unemployment and rising wages. The big question is how many more times will the Fed raise rates in 2018 and how will it affect the economy and stock market?

In March, the fed lifted its key lending rate, which helps determine the rate for credit cards, mortgages, auto loans, and other borrowing, to a range of 1.5% to 1.75%. Even in a range of 1.5% to 1.75%, interest rates are still near historic lows.

The March rate hike represents an increase of a quarter of a percentage point from the last time the Fed raised its rates in December 2017.1 It was also the sixth time the Fed has raised interest rates since December 2015, when it started to reign in its monetary policy for the first time since the 2008/2009 financial crisis.

Central banks use interest rates as way to regulate the U.S. economy and control inflation. During the financial crisis, the Federal Reserve artificially lowered interest rates in an effort to encourage businesses and individuals to borrow and spur economic activity.

Now that the U.S. economy is chugging along, economists are wondering how aggressive the central bank will be in 2018 with its rate hikes. If the Fed raises rates too quickly it could hurt the U.S. economy and hammer debt laden Americans. If it goes too slow, the U.S. economy could heat up too much.

Case in point, the U.S. economy is doing well and wages are inching higher, but Americans are saddled with debt. In fact, at the end of 2017, total U.S. household debt hit an all-time high of $13.5 trillion. It was also the fifth consecutive year in which household debt advanced, with increases in the mortgage, credit card, auto, and student loan categories.2

Higher rate hikes might be great for financial institutions and those who have money in the bank, but there aren’t a lot of Americans with disposable income. What higher rates will do is make borrowing more expensive, which could dampen U.S. economic activity related to housing and car sales. It will also be a burden for Americans carrying that record debt.

Current projections forecast three or four interest rate hikes in 2018.3 Most are hoping the Fed will raise rates gradually, but stronger U.S. economic growth and signs that inflation is on the rise could result in more aggressive rate hikes.

While the U.S. economy is churning out solid quarterly gross domestic product numbers, Trump’s recently approved tax cuts and public spending could stoke the economy a little too much. If this happens, the Fed will need to raise rates more aggressively to cool the economy down.

But the U.S. is not an economic island. The U.S. is also in the midst of a trade war with China, the second largest economy in the world, as well as trade disputes with a number of other countries, including Canada and Mexico.

Trade barriers are of course bad for the U.S. economy: inflation goes up, there is less growth, and lower productivity. This could result in more gradual rate hikes.

All of which will affect U.S. business sectors and industries differently. Knowing which ones to invest in will make all the difference.

Learn-To-Trade.com, Canada’s Leader in Stock Market Trading Courses

Interest rate hikes impact the U.S. economy and stock market on a number of different levels. The impact of a U.S. rate hike is also felt in Canada; that’s because our two economies are so closely enmeshed. When it comes to rate hikes south of the border and investing, the trading experts Learn-To-Trade.com can show you how you can trade confidently and profit consistently.

Learn-To-Trade.com is Canada’s oldest and leading stock market trading courses, and is designed to help investors of every skill level profit no matter what the markets are doing.

Investors who take Learn-To-Trade.com’s stock market trading courses will learn about market trends, technical analysis, fundamental analysis, commodities, futures, foreign markets, stock index trading, cryptocurrencies, blockchain, and Forex trading. They also learn about risk management and capital preservation.

At Learn-To-Trade.com we also understand that investors have different needs, that’s why we provide a unique, Lifetime Membership that allows you to re-attend any part of the program as often as you’d like.

To learn more about Learn-To-Trade.com’s stock market trading course, contact us at 416-510-5560 or by e-mail at info@learn-to-trade.com.

Sources:

  1. “Federal Reserve issues FOMC statement,” Federal Reserve, March 21, 2018; https://www.federalreserve.gov/newsevents/pressreleases/monetary20180321a.htm.
  2. “Household Debt Jumps as 2017 Marks the Fifth Consecutive Year of Annual Growth,” New York Federal Reserve, last accessed April 16, 2018; https://www.newyorkfed.org/microeconomics/hhdc.html.
  3. Cox, J. “Fed’s Dudley: More than four interest rate hikes unlikely this year,” CNBC, April 16, 2018; https://www.cnbc.com/2018/04/16/feds-dudley-more-than-four-interest-rate-hikes-unlikely-this-year.html.

Photo Credit: iStock.com/JimVallee

The following two tabs change content below.
George Karpouzis is the co-founder of Learn-to-Trade and has been personally providing education and mentoring to over 3000 members since 1999. George has been trading in the stocks, options, futures and forex markets using technical analysis since 1986. With the help of advancements in trading technology the Learn To Trade program is now accessible worldwide. His background and passion for teaching brings an invaluable asset to our members. George is constantly striving to improve the program content and develop new strategic relationships for the benefit of the members. Add me to your G+

Testimonial 1

Don’t hesitate jump into it right now. You will be glad you did!

Susan C

Learn To Trade
4.0
2014-08-19T04:45:40-04:00

Susan C

Don’t hesitate jump into it right now. You will be glad you did!

Testimonials 2

The ongoing support has been the reason for my success

Patrick L

Learn To Trade
4.0
2014-08-19T04:46:33-04:00

Patrick L

The ongoing support has been the reason for my success

Testimonial 3

I wanted to let you know that I had taken your course in the fall of 2013. I took your advice and used demo accounts for the last quarter of 2013. I switched to real money trading account in the Near Year, when I finally felt comfortable. Following the lessons taught to me by you (don’t jump on a moving train, peaks and valleys, EMA..etc), I wanted to let you know that I have been successful beyond my own expectations. Thank you very much – taking the Learn-to-Trade course was, by far, the best decision I made in my business career.

Steven R

Learn To Trade
4.0
2014-08-20T02:56:18-04:00

Steven R

I wanted to let you know that I had taken your course in the fall of 2013. I took your advice and used demo accounts for the last quarter of 2013. I switched to real money trading account in the Near Year, when I finally felt comfortable. Following the lessons taught to me by you (don’t jump on a moving train, peaks and valleys, EMA..etc), I wanted to let you know that I have been successful beyond my own expectations. Thank you very much – taking the Learn-to-Trade course was, by far, the best decision I made in my business career.

Joseph L

The past options and forex tutorials taught by George were very helpful. I find these tutorials invaluable for a busy person like myself. I was able to keep myself up to date and on track ready to continue the learning process. Thanks for all the help and keep up the great work.

Joseph L

Learn To Trade
4.0
2014-08-20T10:36:37-04:00

Joseph L

The past options and forex tutorials taught by George were very helpful. I find these tutorials invaluable for a busy person like myself. I was able to keep myself up to date and on track ready to continue the learning process. Thanks for all the help and keep up the great work.

Harley S

The course is amazing. Where were you 30 years ago?

Harley S

Learn To Trade
5.0
2014-08-20T10:37:39-04:00

Harley S

The course is amazing. Where were you 30 years ago?

Partick M

I learned the basics I needed to trade successfully.

Partick M

Learn To Trade
4.0
2014-08-20T10:38:34-04:00

Partick M

I learned the basics I needed to trade successfully.

Iouri G

I like making money. I’m very happy, so far so good

Iouri G

Learn To Trade
4.0
2014-08-20T10:39:27-04:00

Iouri G

I like making money. I’m very happy, so far so good

Akos B

I learned things it would have taken me years to figure out

Akos B

Learn To Trade
5.0
2014-08-20T10:40:05-04:00

Akos B

I learned things it would have taken me years to figure out

Robert B

There is always someone ready to answer my questions.

Robert B

Learn To Trade
4.0
2014-08-20T10:40:59-04:00

Robert B

There is always someone ready to answer my questions.

Uldus V

I was impressed with the course’s professionalism and enthusiasm.

Uldus V

Learn To Trade
5.0
2014-08-20T10:41:40-04:00

Uldus V

I was impressed with the course’s professionalism and enthusiasm.

Dean K

I wish I knew about trading as a business years ago!

Dean K

Learn To Trade
4.0
2014-08-20T10:42:24-04:00

Dean K

I wish I knew about trading as a business years ago!

Peter P

Learn to Trade provided me with strategy, self-confidence and discipline

Peter P

Learn To Trade
4.0
2014-08-20T10:42:57-04:00

Peter P

Learn to Trade provided me with strategy, self-confidence and discipline

Shelley P

I took your course in 2008 and loved it. Since then I have been using what I learned at Learn-to-Trade to nicely supplement my pension income. Wanting a carefree type of trading, I have for the most part just sold options and made a monthly income which is a nice addition to my pension. I know I never would have made this kind of trading income without Learn-to-Trade. Thank you!

Shelley P

Learn To Trade
5.0
2014-08-20T10:34:39-04:00

Shelley P

I took your course in 2008 and loved it. Since then I have been using what I learned at Learn-to-Trade to nicely supplement my pension income. Wanting a carefree type of trading, I have for the most part just sold options and made a monthly income which is a nice addition to my pension. I know I never would have made this kind of trading income without Learn-to-Trade. Thank you!

Amir

Hi George,

I just wanted to thank you again for the amazing work on the tutorials especially Options trading.   Prior to joining, I had underestimated the quality of the trainings but they certainly far exceeded my expectations. Only I wish I’d found you 5-10 years ago!
Learn To Trade
5.0
2016-10-07T08:56:52-04:00
Hi George, I just wanted to thank you again for the amazing work on the tutorials especially Options trading.   Prior to joining, I had underestimated the quality of the trainings but they certainly far exceeded my expectations. Only I wish I’d found you 5-10 years ago!
4.0
14