Now that the Federal Reserve’s initial rate liftoff has taken flight, gear up for two more hikes in 2016, according to one economist. ‘At most, we’ll probably see two rate hikes next year,’ said Simon Smith, chief economist at FxPro, based in London. ‘I think the Fed is going to take it pretty gradually.’ In a poll among 17 Fed officials, portrayed in the central bank’s well-known ‘dot plot’ graph, seven officials see rates rising to 1.375 percent by the end of 2016, while just three expect short-term rates to rise north of 1.5 percent. But, Smith expects further downward revisions on this forecast. ‘Just [because of] the still slow recovery in core inflation,’ he said. ‘And Fed Chair Janet Yellen earlier this month underlined that the Fed will remain data dependent and focused on that recovery in inflation.’ Smith spoke with TheStreet’s Scott Gamm from his firm’s trading floor in London.
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