Sam Chandan

Interest rates are likely going to rise another four to five times through early 2020 as the Federal Reserve reaches its targets, according to Sam Chandan of Chandan Economics. The good news: the Fed's plan to tighten monetary policy is at its halfway point and we can expect continued caution from the Fed as they slowly increase rates.

“My expectation is that we will see another rate increase at the December meeting and a series of rate increases in 2019 and early 2020 after which time the Fed will have reached its targets,” Chandan, the founder of Chandan Economics, a Dean at NYU SPSSchack Institute of Real Estate and a partner at CapriCapital, tells GlobeSt.com. “We are past the halfway point in terms of the Fed tightening its monetary policy in the United States. Between now and 2020, including December 2018, we expect to see four or five more rate increases.”

This is an unusual cycle in that it has been one of the longest recoveries in history and interest rates have remained at historic lows for years. The Fed is inching rates up slowly—but the economy is strong and can withstand and absorb the higher rates without impacting market activity. “By any historic norm, the Fed has moved in a cautious way in its approach to rate increases, and I think this has reflected the depth and the scope of the financial crisis and a degree of uncertainty regarding the path to growth,” says Chandan. “What has allowed for monetary policy to remain accommodative for an extended period of time has been the absence of inflationary pressures, even as the labor market has tightened. The Fed has moved cautiously out of concern for the resilience of the economy expansion. Now, the Fed believes that the expansion is resilient and that the economy can withstand and absorb the rate increases. At the same time, they have not been under pressure to raise rates because of significant price stability.”