This past week, Federal Reserve Vice Chairman Stanley Fischer said that predictions for four federal funds rate increases this year were “in the ballpark.” Should they occur the range for the fed funds rate would increase to 1.25%-1.5% by the end of 2016. The range is currently at 0.25%-0.5%.

To be sure, a lot can happen over the course of a year, but there is not much happening now to elicit more fed funds rate increases.

Deflation, as we mention above, is an issue. The Fed wants annual inflation running at 2% annually. At the same time, U.S. economic growth is stagnating. Let's also not forget the ultra-strong dollar, which is near a 10-year high against the euro and a five-year high against the Chinese Yan. If you're considering a trip to Mexico, Brazil, Argentina, or some other Latin American hotspot, by all means go. It's been decades since your dollar has gone so far.

If the Fed were to continue to raise the fed funds rate, the dollar would continue to strengthen. Deflation would become even more of an issue. Rates on floating-rate loans would rise, but rates on longer-term fixed-rate loans would likely fall, thus risking a yield-curve inversion.

So, for now, we'll ignore what the Fed says on interest-rate increases. We just don't see it.

Information provided by Jessica Regan.

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