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FOMC Majority Wants Rate Hikes before Year End
Thursday, June 18, 2015 6:35 AM

A majority of the Federal Open Market Committee (FOMC) would like to see the central bank raise short-term interest rates twice before the turn of the calendar year, a review of the “dot plot” that accompanies the FOMC’s policy statement, released Wednesday, has found.

The Federal Reserve also said in its policy statement—released at the conclusion of its two-day policy-setting meeting—that the economy has expanded at a moderate pace since its last meeting.

“In addition to the positive developments noted in the statement, we’re especially encouraged by recent strong housing market data—a robust housing market has historically been the driver of fast economic growth,” said Mike Schenk, CUNA vice president of economics and statistics. “All of which means that we should see a healthy rebound in overall economic growth from the unexpectedly weak first quarter.”

The Federal Housing Finance Agency reports home prices gained 5.2 percent over the past year and now are above pre-recession levels. Schenk noted that June housing starts came in at a healthy 1.036 million units, while June building permits—a leading economic indicator—topped out at 1.275 million units, an 11.8 percent jump. That comes on the heels of a 9.8 percent gain in May.

“These developments have helped to boost both consumer and business confidence, as the National Association of Home Builders’ confidence index rose five points to a reading of 59 in June,” Schenk added. A reading above 50 means most builders generally hold a favorable view of the market for newly built, single-family homes. He said, “In addition, measures of current and future sales expectations are at their highest levels since the last quarter of 2005.”

The FOMC, which has four meetings left this year, will next meet July 28-29.