Sure, we are just entering our second month of the new year. But, Fed rate hike predictions for 2016 have already changed. After the 0.25% increase made by the Fed in December 2015, many financial experts expected at least one and as many as four rate hikes throughout 2016. However, the folks at CNN Money are now telling their readers that there is a good chance that we won't be seeing any rate hikes at all this year.
Fed Rate Hike Predictions for 2016 Have Changed
Why the change in the Fed rate hike predictions for 2016? Foreign markets, such as Japan's NIKKEI index and the European market, were hit especially hard last month. In fact, the Bank of Japan has gone so far as to cut their interest rates to -0.1%. Yes, that is a negative interest rate! Our world has gotten a lot smaller over the years. Many markets are dependent upon how foreign markets are doing. When one gets hit hard, it has a domino effect on other markets around the globe.
Oil prices are another reason that Fed rate hike predictions for 2016 have changed. They continue to fall. As of the writing of this blog post, oil hovers around $30 per barrel. That is almost $20 per barrel lower than just three months ago. And it continues to decline. While this feels great at the gas pump, it has hit large oil-rich countries like Saudi Arabia hard. Why should you care about Saudi Arabia? One reason is that they provide the financial backing for huge foreign investments, including those in the United States. Without money from oil, they have to tighten up their investments.
The United States' economy remains steady. However, financial experts believe that the downward turn of other markets may choke any growth the US could be making in 2016. This may force the Fed to rethink any future increases. This also means that mortgage rates could remain steady or may possibly decrease this year. The next Federal Reserve meeting is March 15th and 16th. I'm sure we will learn more at that time.
What do you think? Is the Fed going to raise rates at all this year? Will it affect whether you buy a home this year or not? Please leave your thoughts in the comments below.
Charlene Hamilton, Your Reno Real Estate Specialist
Originally posted on my Reno real estate blog here: http://charlenehamiltonrealestate.com/mortgage-rates/fed-rate-hike-predictions-for-2016.
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