2017 US economy / Fed outlook - NAB

Analysts at National Australia Bank offered an outlook for 2017 US economy and forecasts for the Fed's monetary policy.

Key quotes:

"With the labour market still making solid progress and inflation (on a core basis) not that far from the Fed’s 2% long-term target, we still expect the Fed to increase the federal funds rate target range by 25 basis points in its December meeting. 

The labour market is not running so hot that it will feel pressured to increase rates in its November meeting only days before the US presidential election. Any rate hike is dependent on the economy remaining broadly on track and no major shocks (either domestic or form abroad) which cause significant financial market volatility.

For 2017, if our forecasts of a further gradual increase in the inflation rate and a declining unemployment rate come to fruition, we expect two further rate hikes, in what is proving to be a very gradual tightening cycle."