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  • Fed Policymaker Wants 4 Rate Hikes In 2017; Markets Yawn

Fed Policymaker Wants 4 Rate Hikes In 2017; Markets Yawn

Boston Federal Reserve President Eric Rosengren called for interest rate hikes at every other meeting in 2017 to keep the economy from overheating. But that made little impression on financial markets, with the Dow Jones industrial average, bank stocks, Treasury yields and even odds for rate increases at upcoming meetings all modestly lower in afternoon trading Wednesday.

The Fed raised interest rates on March 15 by a quarter-point, to 0.75%-1%, as expected. But at that time policymakers signaled that they still planned to hike rates a total of three times in 2017, despite speculation that they might step up the pace.

Rosengren, who has turned more hawkish in the past year, suggested that he's ready to tighten at a faster clip, with a total of four hikes in 2017.


"My own view is that an increase at every other FOMC meeting over the course of this year could and should be the committee's default," Rosengren said in a Wednesday speech.

San Francisco Fed President John Williams, who helped convince markets that a March hike was likely, was less decisive Wednesday, saying that he "would not rule out more than three increases total for this year."

But financial markets largely shrugged of Rosengren's comments. Without confirmation from Fed chief Janet Yellen or other key officials, investors likely don't see his statement signaling a shift by the central bank. Rosengren is not a voting member on the FOMC.

The Dow Jones industrial average fell 0.2% on the stock market today, with little movement following the Fed speakers. The Nasdaq composite, led by Amazon.com (AMZN), climbed 0.4%. The S&P 500 index nudged 0.1% higher.

Bank stocks largely were fractionally lower intraday after rebounding Tuesday. Dow component JPMorgan Chase (JPM) dipped 0.4%, slipping back below its 50-day line. Bank of America (BAC) edged down 0.55%. Citigroup (C) fell 3 cents to 59.39.

The 10-year Treasury yield slid 4 basis points to 2.38%.

Meanwhile, the CME Group's FedWatch Tool showed the odds of a second rate hike by the June meeting edging fractionally lower to 52.9%.

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