According to Marketwatch, central bank is broadly anticipated to raise the short-term fed funds in December, making it the first increase in almost a decade. However, the bond market futures imply rates will only increase by a 50-point basis in 2016.
Top Goldman Sachs economists declare the Fed is likely to increase rates by 1% next year. They expect the US will proceed to grow fast enough to stimulate the Fed to increase rates by an average of once a quarter. They lead to a tight labor market, steady consumer spending, stronger home sales and construction and a likely rise in government outlays, among other things.
Early 2008 was the last time the fed funds rate stood at 1%, shortly, as the central bank made short-term rates to near zero in a frenzied attempt to help the economy in the Great Recession.
Goldman economists acknowledge they may be overestimating. A possible setback would be increasing rates that could freeze the recovery in the housing market by increasing the cost of mortgages at a point when prices are already relatively high.
A variety of consumers loans are related to the fed funds rate, therefore, certain sales of goods such as autos or appliances could be narrowing off.