MA’s Ken Matheny Quoted in St. Louis Post-Dispatch

MA’s Ken Matheny was quoted in the article, “Fed rate increases move from a crawl to a walk” by By David Nicklaus of the St. Louis Post-Dispatch. (Excerpts shown below)

Not long ago, the mere mention of higher interest rates sent financial markets into a tizzy.

Now, markets are shrugging off, and maybe celebrating, the fact that the Federal Reserve just quickened its pace of rate increases from a crawl to a walk. Stocks remain near record highs, bonds are stable and the dollar is little changed.

In December, markets and many economists didn’t believe a Fed forecast that implied three rate increases this year. It had pushed through only one increase in 2015 and one in 2016, after all.

Three months later, almost everybody believes that Wednesday’s quarter-point move will be duplicated twice more before Christmas. That would put the overnight interest rate, called the federal funds rate, at between 1.25 percent and 1.5 percent. A similar pace next year would put it above 2 percent.

Dare we call this a return to normal after a decade of dramatic shocks and bold central-bank stimulus?

We’re going to get to something like normal eventually, but it is going to be different than the old normal,” says Ken Matheny, an economist at Macroeconomic Advisers in Clayton. “The Fed is on track for a more predictable, more rapid pace of rate hikes, assuming the economy makes progress.” (click here for article)

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