Three reasons the Fed wants to hike rates in March

After raising interest rates just twice in 10 years, the Federal Reserve is suddenly in a hurry to get moving on its next rate hike.

Right about when the Fed would vote on a rate hike March 15, the legislated extension of the debt ceiling expires, putting Congress on notice it needs to come to a budget solution to avoid default. The government would run out of money sometime in the fall, and that's when the budget battling could really heat up in Washington. While it's widely expected the administration and Congress will work out a deal, Ader said there is also going to be a lot of discussion about other budget-related topics, such as tax reform, fiscal stimulus and how to pay for it all.

A second reason is something Fed critics and fans alike have been concerned about for a very long time. Michael Feroli, chief U.S. economist at JPMorgan said, in a note, the Fed may be worried it is going to overshoot on full employment and fan inflation. That would mean the Fed is behind the curve, which is something that constantly nags at markets.

What has changed is equity markets. Financial conditions have eased considerably over the last little while. The increase in the equity market hasn't been associated with an appreciation in the dollar," he said, adding the Fed funds futures also signal a rate hike.

Of course, the Fed hiking in March will increase expectations that the Fed will deliver quarterly rate hikes," noted Feroli. He expects to see the Fed raise its forecast for rate hikes in its March forecast. "It is a harder to get the median to increase to four hikes, but given the recent rhetoric that can't be ruled out.

Read more:

• And for all the bounty hunters: Iran offers $80m for the head of Donald Trump
• US service member and 2 US Defense Dept contractors killed in Kenya attack
• Iranian Quds leader Qasem Soleimani has been killed – how are markets reacting
• A calm end of an otherwise loud 2019
• Old but Gold – Top 5 posts of Varchev Finance