June 15th, 2017

A long-overdue and highly anticipated shift is underway that may change the character of the rest of this economic cycle. Specifically, the Federal Reserve (Fed) has finally been able to follow through on its projected rate hike path, including the second hike for 2017 announced at the conclusion of the Federal Open Market Committee’s June 13–14 meeting. This move highlights two important signals—first, the Fed increasingly trusts that the economy has largely met its dual mandate of 2% inflation and full employment, but second and of perhaps even greater importance, it appears there may finally be a new driver—the long-awaited arrival of fiscal policy—that may provide the economic backstop that monetary policy has offered throughout this recent expansion.

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