WASHINGTON (6/18/15)--A majority of the Federal Open Market Committee (FOMC) would like to see the central bank raise short-term interest rates twice before the turn of the calendar year, a review of the “dot plot” that accompanies the FOMC’s policy statement, released Wednesday, has found.
Analysts had been expecting the Federal Reserve’s monetary policy-making body to signal that a rate hike was forthcoming, possibly at its next meeting in July but more likely at its September meeting or later, and the dot plot all but confirmed that possibility.
Especially considering many on the FOMC would like to see not one, but two increases.
“Today’s FOMC statement continues to align with CUNA economist expectations, as outlined in our baseline economic forecast,” said Mike Schenk, CUNA vice president of economics and statistics.
The Federal Reserve also said in its policy statement--released at the conclusion of its two-day policy-setting meeting--that the economy has expanded at a moderate pace since its last meeting.
“In addition to the positive developments noted in the statement, we’re especially encouraged by recent strong housing market data--a robust housing market has historically been the driver of fast economic growth,” Schenk said. “All of which means that we should see a healthy rebound in overall economic growth from the unexpectedly weak first quarter.”
Schenk also noted that June housing starts came in at a healthy 1.036 million units, while June building permits--a leading economic indicator--topped out at 1.275 million units, an 11.8% jump. That comes on the heels of a 9.8% gain in May.
Further, the Federal Housing Finance Agency reports home prices gained 5.2% over the past year and now are above pre-recession levels.
“These developments have helped to boost both consumer and business confidence, as the National Association of Home Builders’ confidence index rose five points to a reading of 59 in June,” Schenk added. A reading above 50 means most builders generally hold a favorable view of the market for newly built, single-family homes. He said, “In addition, measures of current and future sales expectations are at their highest levels since the last quarter of 2005.”
The FOMC, which has four meetings left this year, will next meet July 28-29.