The stock market is getting hammered, the rate has gone south in a hurry, and many on the Federal Reserve are more stupid. But Fed is still likely to raise interest rates again in December, economists said Thursday.
FOMC "managed" in the minutes of the November meeting that they intend to raise interest rates in December and "the whole mantra has been that gradual rate hikes remain appropriate," said Kevin Logan, chief US economist at HSBC in New York.
Read: Bold officials eyes December rate increase, but stress path from there is uncertain
Seth Carpenter, US chief economist at UBS, agreed.
Bold officials "did not do much to lead the markets" Except To think, there would be an interest rate hike in December, he noted.
Sneaker had been one of the few economists earlier this year, who expected a December break. But he said he returned to expect a December rate hike after The strong work report for October, which showed 250,000 new jobs created.
See: Job creation was slow but it has sprung up
Carpenter said that his entire premise for a December break was that t The regions of a decline in growth in the economy would be visible. But it did not happen, he said.
Carpenter told Governor Jerome Powell's comment late last month that interest rates were "just below", neutral was misunderstood by investors.
Read: Powell seemingly tough about the interest rate
The committee's center wants to come to neutral so it will not be happy to be "under" it. "They will do a little more hikes," he said.
There is some time left for Fed officials to lead markets away from December, but not much. Officials will stop talking public Friday night before their two-day meeting ending December 1
Dallas President Rob Kaplan said on Thursday that the US central bank should be "patient" at further interest rates.
Gennadiy Goldberg, senior US interest rate director at TD Securities, said Kaplan spoke in 2019, not December. Goldberg said that he makes his own calculations of market chances for a December rate increase and said that they remain "very well priced".
He estimates that the odds for a December trip are 85%, just down from 90% earlier.
Logan or HSBC said it was "obviously" possible that the Fed would not raise interest rates in two weeks.
"What's happening now is not purely economical, it's a black-swan event." He said.
Markets are concerned that the relationship between China and the United States breaks down. This puts growth prospects for both the country and the world, he said.
"Fed must be aware of this. There is a possibility of a break. My opinion is that they will continue," said Logan.
Shares were down sharply for the second fast trading day. Dow Jones Industrial Average
was down to more than 650 points. Return on 10-year government bond
was down to 2.85% falling steadily after hit a high of 3.24% in early November.
There was no consensus among analysts during the Fed interest rate hikes in 2019.
The timber man of UBS now believes that the Fed will stop after the December high.
Goldberg said that three interest rate hikes in 2019 are his baseline forecast.
Logan said he expects two hikes in the first half of next year followed by a move lower in the second half.