Even if the Federal Reserve raises interest rates next month, subsequent rate hikes over the next two years will be modest, according to John Silvia, Chief Economist at Wells Fargo. Silvia said while he believes a September rate hike is likely, there have been no signs of inflation data picking up. ‘I think one surprise to most people is actually since 1994, U.S. inflation has averaged less than 2%. So setting 2% as a goal is actually quite challenging,’ said Silvia. He believes the Fed will continue to lower its long term interest rate outlook, and he does not see big increases in interest rates over the next few years. Silvia said inflation data, particularly the Employment Cost Index, will be the most important indicator that he will watch between now and the September meeting of FOMC policymakers. Silvia spoke to TheStreet’s Rhonda Schaffler at Camp Kotok in Maine, an annual gathering of economists and money managers.
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