The devastation caused by hurricanes Harvey and Irma and now Maria will make the U.S. Federal Reserve’s job of conducting monetary policy trickier, but it is unlikely to change the Fed’s plans of raising rates. It is conceivable, however, that in the near future, the Fed could be forced to cram more rate hikes in a shorter time frame—something it wants to avoid.
“On the surface, the hurricanes could make it [the Fed] a little more hawkish … over the next year, but in the near term, because the economic data are quite muddled by the storms, … it probably warrants more dovishness, meaning the Fed delays the next rate increase,” said Sal Guatieri, a senior economist with BMO, in a phone interview.
