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Jim Cramer Predicts Fed to Stop Rate Hikes

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By    |   Monday, 22 October 2018 04:02 PM

CNBC’s Jim Cramer says Federal Reserve Chairman Jerome Powell will hike interest rates once more in December and then stop.

"I just think he's going to blink," Cramer said on CNBC.

"It's going to be one and done in December. That's what I'm saying is happening," he added. "And then he's going to pause," Cramer predicted about additional rate hikes.

The Fed has indicated one more hike this year then three in 2019 and one or two after that.

Meanwhile, the steady pace of U.S. economic growth, supported in part by monetary policy, is consistent with the central bank’s plan to continue gradually lifting interest rates, said Raphael Bostic, president of the Federal Reserve Bank of Atlanta.

“We’ve seen the economy continue to strengthen and continue to perform in a very positive way,” Bostic, a voting member of the Fed’s committee that sets interest rates, said during a community conversation at the Atlanta bank’s headquarters Saturday.

He said it’s been more than nine years since the recession ended and the goal of policymakers is "to try to keep this going as long as possible," Bloomberg reported.

Even after recent increases, the Fed’s key overnight lending rate is set at a range of 2 percent to 2.25 percent -- still below the 2.5 percent to 3 percent range that the Fed considers neutral because it neither stimulates nor restrains growth, Bostic said. “There’s still a couple more moves that are left,” he said.

The economy has been expanding since the end of the recession in mid-2009, helping drive unemployment to a 48-year low. President Donald Trump recently stepped up criticism of the central bank’s moves to raise interest rates to keep growth from triggering an increase in inflation, saying “the Fed has gone crazy” and blaming it for stock-market losses.

Another two to three interest rate increases from the Fed will likely put U.S. borrowing costs in “neutral” territory where it is neither stimulating nor restricting economic growth, Dallas Federal Reserve President Robert Kaplan said on Friday.

At an event sponsored by the Manhattan Institute, Kaplan said he has not decided yet whether the Fed would need to raise rates above this neutral level.

Against solid economic fundamentals, Kaplan said current Fed policy remains “modestly” accommodative. It may achieve a “neutral” level with two to three quarter-point hikes toward 3 percent by June 2019, Reuters reported.

Kaplan’s comments came after the U.S. central bank on Wednesday released minutes on its Sept. 25-26 policy meeting where policy-makers agreed to raise key short-term interest rates for a third time in 2018 as the economy has been expanding at a faster pace due to the tax cuts enacted last December.

“The Fed is basically meeting its dual mandate,” Kaplan said, referring to U.S. unemployment hitting its lowest in almost 49 years in September and inflation near its 2 percent goal.

Kaplan will be a voting member of the Federal Open Market Committee, the central bank’s policy-setting group, in 2020. His view is seen in step with Fed Chairman Jerome Powell’s.

Powell said earlier this month the U.S. economy can expand for “quite some time” and the Fed may raise interest rates past “neutral.”

Kaplan expects economic growth to run about 3 percent in 2018 and the jobless rate, currently at 3.7 percent, to fall further.

While the economy will likely cool from current levels, he said he did not expect a U.S. recession anytime soon due to a strong consumer sector, which accounts for nearly 70 percent of overall economic activity.

Kaplan voiced concerns about challenges the economy faces including an aging workforce, a shrinking pool of skilled labor and geopolitical uncertainties.

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CNBC’s Jim Cramer says Federal Reserve Chairman Jerome Powell will hike interest rates once more in December and then stop.
jim cramer, fed, rate, hike
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2018-02-22
Monday, 22 October 2018 04:02 PM
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