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  • Writer's pictureAIM Team

Fed faces pressure to step up rate hikes after spending package

The Federal Reserve will face growing pressure to accelerate its planned interest-rate increases after a nearly $300 billion spending package signed into law Friday.

Economists at banks and consulting companies are busy marking up their economic forecasts in response to the legislation, saying it will help lift growth in 2018 to well above the 1.8 percent rate the Fed reckons is the economy’s long-run potential.

In a note to clients Friday, JPMorgan Chase & Co. chief U.S. economist Michael Feroli raised his forecast for growth this year to 2.6 percent, from 2.2 percent previously, and for next year to 1.9 percent from 1.6 percent. He also reaffirmed his call that the Fed will raise rates four times this year and next.

“We are now more confident that the Fed will need to move more aggressively than either the market or the dots currently anticipate,” said Feroli, a former Fed researcher.



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