Fed not hiking interest rates may panic market: Economist
Grant Thornton Chief Economist Diane Swonk on the outlook for Federal Reserve interest rate hikes and concerns over the U.S. economic outlook.
In the unlikely event that the Federal Reserve refrains from raising interest rates, Wall Street risks tumbling into a panic, according to Grant Thornton Chief Economist Diane Swonk.
“There would be a sense of what do you know that we don’t know? And what do you know that’s coming that we don’t know that’s coming? And you could feed into a panic in financial markets and that’s certainly not something you’d want to do at this stage,” she told FOX Business’ Neil Cavuto Tuesday.
The central bank is expected to raise the federal funds rate for the fourth and final time on Wednesday at the conclusion of its two-day policy meeting.
Swonk said she expects Fed Chair Jerome Powell to pivot and move away from delivering a message that suggests further gradual increases in the benchmark federal funds rate.
“We’ll also see that infamous dot plot where they map out what they’re going to do on the trajectory of rate hikes and that I think will come down to somewhere between 2 and 3 after being firmly at 3 in the month of September” she said.
Last month, the Federal Open Market Committee maintained the target range for the federal funds rate at 2 to 2.25 percent as investors fret over the impact a trade war with China may have on the U.S. economy.
Swonk added uncertainty continues to weigh heavily on the markets and the Fed which she says can be eased by resolving some of the trade issues.
“As the straws on the back of the camel’s back pile up, you worry about which one will break the camel’s back and push us into a recession,” she said.