Wednesday, October 15, 2014

POSITIVE OUTLOOK CONTINUES FOR U.S. ECONOMY AND WORK TRUCK INDUSTRY IN 2015

By Steve Latin-Kasper
NTEA Director of Market Data & Research
(248) 479-8193stevelk@ntea.com

This article was published in the October 2014 edition of NTEA News

The U.S. economy continues to improve, but the Federal Reserve is probably not going to raise interest rates until the summer of 2015, at the earliest. This timeline is consistent with the statements made at the Federal Reserve Board of Governors’ meetings in the last year. During its September meeting, the Fed announced that it still believes rates should remain low for a “considerable time” after its bond-buying (economic stimulus) program is completed — likely by the end of this year.

The Fed also detailed its intention to end the stimulus efforts that have been in place since the 2008 credit crisis and return interest rates to more normal levels. As expected, the Fed said it will limit asset purchases to $15 billion per month — a reduction of $10 billion a month. When it meets again in October, the Fed is widely expected to announce one last reduction prior to ending the stimulus program.

An improving job market has put some pressure on the Fed to begin unwinding its stimulus efforts and consider raising rates to prevent inflation. The Fed shared it intentions to taper its expansionary monetary policy, releasing data from the district banks which forecasted a median rate of 1.375% at the end of 2015.

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