Q1 2016 Economic and Market Perspectives

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To the surprise of few, the Federal Open Market Committee’s (FOMC) last meeting of 2015 resulted in a Fed Funds rate hike from the 0%–0.25% range to 0.25%–0.50%. Equity and bond markets reacted with a collective yawn. Capital markets and the Federal Reserve (Fed) finally agreed it was time.

Yet, even with added clarity on an important factor like U.S. monetary policy, the future is far from certain. The U.S. economy is entering uncharted, and potentially stormy, waters after seven years of "emergency" monetary policy and nearly a dozen years since the beginning of the last cycle of rate tightening. Today’s economic environment is different from prior tightening episodes as a slowly strengthening domestic economy confronts growth challenges faced by key trade partners.