What is your everyone's thoughts for a rate hike in December?

Question

Just curious to find out what people think whether will have a rate hike in December. We have not had a rate hike for almost 10 years.

Please state "Yes or No" and your reasoning.

Ned Carey · Answer

@James Park Short run no one can predict. Long run it doesn't matter.

Compared to long run averages, interest rates are essentially free. They will still be free if the fed raises rate a full 1%.  Of course the market will not see it that way and likely over react.

I don't try to predict the short term. I try to take advantage of any over reaction.

OK now my prediction

It is a coin toss - 50/50.  Before I read @Chris Martin's post I would have said a clear yes. But considering Christmas economic disruption I think they will play the "Wait and See" game one more time.

This is my 7000th post. That is bound to be lucky so I bet my 50/50 guess is dead on!  :-)

Bob E. · Answer

I am betting on 10 basis points.  Once they raise rates, even by token amount the market will project that forward and a lot of assets will get repriced.

Chris Field · Answer

Were talking about a 1/4 point its not that big of a deal.

Eventually mortgages will get back to where they usually are.

Mark Creason · Answer

I don't think rates will go up.  I agree with Linda as Yellin has made statements about when rates will go up.

Mark

Joel Owens · Answer

It's pointing to a YES but they are waiting for a few reports to come in.

On the commercial real estate side I am working on getting my clients rates locked before the meeting approaches. Lenders tend to raise borrowing rates in anticipation of a potential hike. I am trying to get it locked so lender do not go up on us 25 basis points as it affects cash flow on the cap rate we are under contract at.

From another site:

NY Times

"So When Might the Fed Announce a Higher Target?

The action will most likely be taken on Dec. 16. That’s when the Federal Open Market Committee, the Fed policy-making group that sets the target rate, concludes its next two-day meeting. Janet L. Yellen, the Fed chairwoman, is scheduled to hold a news conference that afternoon. (In the unlikely event that policy makers take no action, the next meeting dates are Jan. 26-27 and March 15-16.)

The unexpectedly strong October jobs report, released in early November, has accelerated speculation that the Fed will raise rates in December. The unemployment rate now stands at 5 percent, or what normally is considered “full employment” by the Fed and many private economists.

Confidence in jobs growth has replaced worries generated by last summer’s turmoil in the global economy. The slowing Chinese economy and devaluation of the renminbi, the slumping price of oil, jarring downturns in the global stock markets had all prompted questions over when will be the best time for the Fed to raise interest rates.

In testimony before Congress on Nov. 4, Ms. Yellen gave some signals that the rate increase could come in December, saying: “At this point, I see the U.S. economy as performing well” and that “December would be a live possibility.” But she added a cautionary note, saying that “no decision has been made.”

Linda Weygant · Answer

I doubt it.  Janet Yellen has said over and over that she wanted both unemployment below a certain point and wage growth above a certain point before she'll raise it.  We're still seeing crappy wage growth and I don't see Ms. Yellen being wishy-washy over what she says is the right mix of indices.

Mark S. · Answer

I agree with @Matt Mason.

Matt Mason · Answer

Yes.  25 basis point hike in Dec.  A quarter point in and of itself is practically nothing.  It is really more symbolic than anything.  Unless the Nov. jobs report comes in with less than 100k jobs or there is some other major event, it is a no brainer that we'll get a raise IMHO.

Russell Brazil · Answer

I think there will be a rate hike, but the Fed is very dovish, so I think it will only be 1/8th of a point.  But then again what do I know...I thought there would be a hike the last time.

Now that I am typing this though, oil is in free fall, and consumer spending is possibly falling of a cliff....so if these trends do continue...probably no hike.

What is your everyone's thoughts for a rate hike in December?

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