Inflation in 2019 Could Be as High as 2.5%, Says Sit Fixed Income's Doty

The transcript discusses the Federal Reserve's plans to raise interest rates, with expectations of a rate hike on Wednesday and another in December. The Fed aims to reach a neutral funds rate, as the economy is strong and doesn't require additional support. The discussion also covers the late stage of the economic cycle, potential inflation effects from trade tensions, and how these factors influence policymaking. The possibility of inflation exceeding 2% is considered, with market reactions to different inflation scenarios being a concern. The Fed must balance its approach to avoid unsettling the bond or stock markets.

What is the Federal Reserve's current stance on interest rates?

• They have no plans to change rates.

• They are expected to raise rates this year and next.

• They intend to maintain current rates.

• They plan to lower rates this year.

How does the Federal Reserve view the current state of the economy?

• The economy is in a recession.

• The economy is unpredictable and unstable.

• The economy is weak and needs support.

• The economy is strong and requires no additional stimulus.

What stage of the economic growth cycle are we currently in?

• Recession

• Early cycle

• Late cycle

• Mid cycle

What is a potential effect of trade tensions on the economy?

• No effect on inflation

• Increase in inflation

• Decrease in inflation

• Immediate economic growth

What is the Federal Reserve's challenge when adjusting interest rates?

• To ensure inflation remains below 1%

• To avoid causing market volatility

• To increase unemployment

• To decrease economic growth