Deutsche Bank Says Fed Rate Hike Pace Will Be Slower

Current labor market conditions put the Federal Reserve on pace for a December interest rate hike, but other economic indicators suggest future increases may come more slowly than anticipated, Deutsche Bank Securities’ chief economist said Wednesday.

“This is going to be very gradual increase, and certainly the data we’ve had more recently have suggested that, if anything, they’ll be revising down a bit their expectations for rate increases for next year,” Peter Hooper told CNBC’s “Squawk Box.”
Data from the Institute for Supply Management on Tuesday showed the U.S. manufacturing sector contracted in November, falling to its lowest levels since June 2009, when the economy was mired in the recession.

Hooper said a weak manufacturing sector, along with U.S. dollar strength and low oil prices, suggest the Fed can increase rates slowly next year. He told CNBC he is also looking for signs that businesses will ramp up capital spending, noting that low capital expenditures have been at the core of “dismal” productivity.

The Fed is now widely expected to raise interest rates for the first time in more than nine years at its December meeting. Central bankers have held U.S. benchmark fed funds rates at near zero percent since December 2008.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza