Four Fed Rate Hikes May Now Be In The Cards

Investing.com - What was once a near certainty is now up for debate.Market watchers have been predicting that the U.S. Federal Reserve will raise interest rates three times in 2017.Suddenly, a fourth rate hike may be a possibility, thanks to recent events.On the economic front, the latest employment report was stronger than expected.Not only were 200,000 jobs created in January, but a key barometer of wages hit its highest level since 2009.In addition, the most recent inflation report showed core consumer prices at a one-year high. In the markets, the dollar continues to weaken after a sharp downturn in 2017.And the yield on the Treasury's 10-year note is at a four-year high, pushing 3%.The Fed itself just revised its outlook, saying it expected inflation to rise to its 2% target rate and emphasized it is monitoring inflation developments closely.Then there are two big unknowns. How new Fed chairman Jerome Powell sees the threat of inflation and how much the giant tax cut package stimulates economic growth and inflation.Conventional thinking has been for rate hikes in March and June, followed by another in the second half of the year.Bank of New York Mellon (NYSE:BK) said there's now a 50% chance of a rate hike in each quarter of this year.