Predicting the Future Interest Rate
It is likely not possible to forecast the interest rate accurately, as the Federal Reserve has been keeping it new zero for several years now and more recently has been promising rate hikes yet holding press conferences in which the tone is far more dovish than hawkish. Thus, from expectations of four rate hikes a year totaling a 100 basis point rise, expectations are reduced to one, perhaps two, rate hikes, as the "data-dependent" Fed sees bad jobs reports, a stagnating global economy, and other factors putting pressure on the decision to normalize rates (Durden, 2016).
Once rates do hike, however, there is likely to be a sharp correction in the stock market as investors seek less risky investments (even a mere 25 basis point raise is enough to cause investors to flee the market for safer havens, as the previous rate hike showed) (Phoenix Capital, 2016). The rebounding of the market (considering volume) has the appearance more of a short squeeze than the return of confidence, and with the Fed bouncing between hawkishness and dovishness, one cannot know which way rates will go in the foreseeable future. They could even possibly go negative as they have in Europe and Japan...
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