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.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.