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Fed’s Fischer forecasts two more interest rate hikes this year

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         Fed’s Fischer forecasts two more interest rate hikes this year

The Federal Reserve is likely to raise short-term interest rates twice more before the end of the year, a top U.S. central banker said Tuesday.

Two more rate hikes in 2017 seem “about right, that is my forecast,” said Fed Vice Chairman Stanley Fischer in an interview on CNBC.

Fischer and his colleagues voted earlier this month to raise its target interest rate by a quarter-percentage point. The median forecast of the top Fed officials was for two more moves this year.

Stock prices

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  climbed after Fischer’s remarks. His remarks were viewed as relatively dovish. Some Fed officials have penciled in three more rate hikes this year.

Fischer said the central bank was watching developments on Capitol Hill closely but said it was “sensible” for the Fed to take a wait-and-see approach toward tax cut and infrastructure spending plans.

The Fed forecast does assume a small fiscal expansion, he said.

Fischer expressed continued unease with the protectionist rhetoric of the Trump administration.

He said open-trade policies first put in place after World War II have “on average” worked very well for the U.S. and for China.

“I’d be concerned if that basic model is overturned,” he said.

Fischer said he has seen no great difficulties in emerging and developing countries as the Fed has started raising interest rates. The dollar has weakened a bit, which helps debtors in those regions, he noted.

“I think the emerging market countries and developing countries have a pretty good chance of having less difficulty than we were thinking some months ago,” he said.

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