The Fed’s target for the fed funds rate in the
long term is lower than in prior rate hike cycles.
The market has already priced in Fed rate
hikes beginning in mid-2015.
Sustained growth in real gross domestic
product (GDP) above 3.0% at any time over
the next three years could elicit an earlier start
to rate hikes by the Fed and/or more rate hikes
once they commence.
The Fed’s communication with investors and
the public remains muddled, at best.