The April minutes from the US Federal Reserve suggest that the FOMC is charting a course toward September for the next interest rate increase in our opinion.
While the committee left the door open to an increase in June, the modest language change indicates September is the most probable increase date given the current economic data in our view.
We are optimistic with regards to prospects for the US and global economies for the balance of the year.
If the data continues to strengthen as anticipated, Federal Reserve will likely move ahead with 25 basis points in September and then hold to monitor the effects of the rate increase on the US and global economies.
This scenario makes an additional hike possible during December, but it is more likely that subsequent increases will not occur until 2017.
Against the backdrop of a strengthening US and global economy with limited interest rate pressure, Big River Capital’s view is constructive on stock prices for the remainder of 2016.
Our opinion, of course, is always subject to change. To quote economist John Maynard Keynes: “When the facts change, I change my mind. What do you do, sir?”.