The tentative budget deal reached in Washington D.C. gives Federal Reserve policy makers the green light to hike interest rates in December, according to one strategist. Aaron Kohli, interest rates strategist at BMO Capital Markets, thinks the Fed is on hold this week, but is expecting a move in December. He points out the budget agreement between the White House and Congressional leaders removed a stumbling block that might have prevented the Fed from raising rates later this year. ‘I think it’s important to remember that not having a budget in place would have actually shut down a lot of the agencies that collect the data that the Fed needs, so it may have postponed the Fed for much longer than even December,’ said Kohli. ‘And so removing that barrier I think makes it much more likely that you’ll see a hike by year end.’ Kohli believes that in the statement released at the conclusion of the FOMC’s two-day meeting, the Fed will have to strike a delicate balance, weighing economic strengths and risks.
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