December's interest rate hike is secured

The robust employment and labor market report in October gave strong support to the Fed's bid to make the latest interest rate hike this year in December. Kathy Bostjancic, an economist at Oxford Economics, says "the December hike is secure, we saw a really solid employment report." The data is more than strong enough to confirm the Fed's tightening of the economy. Although wage growth is 3%, we saw again in the previous month that hourly pay is 0.2%, which is not a cause for concern. Improving the economic situation will give the Fed a more aggressive move, albeit gradual.

For Bostjancic, it is believed that the Fed will raise interest rates three times in 2019, according to the Dot plan. The FEDs can only become more aggressive if inflation is to rise sharply. They will tighten the economy more quickly if they manage to keep inflation within 2%. Even the criticism from President Trump will not stop the federal move as well as the increased volatility of the markets. According to the CME Group, the market has estimated a 75% chance of raising interest rates next month.

The Committee will meet next week, but without a press conference, and no new interest rate swing is expected. Next year, Jerome Powell will have a press conference after the end of all meetings for 2018.

Graphs: Used with permission of Bloomberg Finance L.P.

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