Wall Street may not be anticipating any interest rate increases this year, but government forecasters disagree as the need to control inflation may outweigh concerns expressed in markets.
In its latest projections for the nation's economy and financial situation, the Congressional Budget Office indicated the Federal Reserve is likely to continuing its normalization of monetary policy, even if investors don't like it.
"CBO expects the Federal Reserve to continue to raise the target range for the federal funds rate (the interest rate that financial institutions charge each other for overnight loans of their monetary reserves) in 2019. In CBO's projections, the rising federal funds rate helps to push up other interest rates in the economy, which, in turn, helps prevent inflation from rising much above 2 percent for any extended time period," the office said in its 10-year outlook update released Monday.
The report does not specify how many times it sees the central bank hiking its benchmark rate.
As things stand, the market is betting that number is zero, while Fed officials indicated in their latest projections released in January that they see two increases. However, those same officials lately have stressed that any further actions will come only if the data justify them. Several members who in the past have been hawkish, or in favor of higher rates, say they now favor a pause while they assess the economic situation.