A number of officials from the central bank have already suggested that two rate rises are possible this year, but economists and investors assessing the economic data are now also leaning in favor of two hikes.
“Yellen has always said that when wages go up between 4 and 5 percent that’s when we raise rates,” Paul Donovan, global economist at UBS investment bank told CNBC, referencing employer costs for employee compensation data from the U.S. labor department, which is now growing at 4.2 percent year on year for wages and salaries.
“This is going to be a very gentle, gradual trajectory, but I think they hike in September and I think they hike in December, I expect two hikes this year. Remember inflation really is picking up in the U.S. in a reasonably notable way, it is going to be coming in comfortably over 2 percent at the start of next year,” he said.
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