Morgan Stanley's Zentner Sees Three Fed Hikes in 2018

The transcript discusses the Federal Reserve's expectations and strategies regarding interest rate hikes. Initially, the Fed anticipated one rate hike in 2015 and 2016, but now expects three hikes in 2017 and 2018. Despite low inflation, the Fed maintains a gradual rate increase approach to prevent an overheating economy. The FOMC statement surprised markets by lowering inflation forecasts while reinforcing the plan for rate hikes. The Fed's dual mandate aims to tighten financial conditions to slow economic growth, not just target inflation. Achieving the 2% inflation goal remains challenging, with the Fed emphasizing a symmetric approach to inflation targets.

What was the Fed's plan for rate hikes in the current year and the next?

• One hike this year and two next year

• No hikes planned for this year

• Three hikes this year and three next year

• Two hikes this year and one next year

Why does the Fed raise rates according to their dual mandate?

• To decrease economic growth

• To tighten financial conditions and prevent an overheating economy

• To solely target inflation

• To increase unemployment

What is the Fed's view on low inflation in relation to their rate hike strategy?

• Low inflation prevents any rate hikes

• Low inflation allows for a gradual rate hike pace

• Low inflation requires immediate aggressive rate hikes

• Low inflation is irrelevant to rate hike decisions

What is the Fed's target inflation rate?

• 3%

• 4%

• 2%

• 1%

What is the Fed's approach to achieving the 2% inflation goal?

• Aggressively raising rates at every meeting

• Reducing rates to stimulate inflation

• Maintaining a gradual pace to encourage inflationary pressures

• Not focusing on inflation at all