More Rate Hikes Expected Next Year
Now that the Federal Reserve has gotten the ball rolling with the first hike in rates in nearly a decade, the industry should expect to see similar hikes in the future.
Since the economic crash, rates have remained untouched until recently. But with the job market improving and the economy steadily stabilizing, the Federal Reserve decided we were in a secure enough place to begin raising rates to more “normal” levels. The announcement came last week that rates were being raised by 25 basis points.
While the transition to higher rates will be gradual, this will not be the only hike we see. It is anticipated the Fed will increase rates three more times in 2016. However, it should be kept in mind that rate hikes often have a delayed and lower impact than originally expected. So while the idea of more rate hikes might initially give people pause, rate hikes will actually stay at extremely low levels compared to rates in the past.
The effects of these rate hikes has yet to be seen but many in the industry are expecting business to go about per usual.