The ratings company expects growth to be “something north of 2 percent this year” and jobs to be created to the tune of about 130,000 per month — a number Roache said is above the “natural rate” of employment growth for the American economy.
“It means the unemployment rate will continue to edge lower, wage growth will continue to edge higher, and that’s a scenario in which the Fed probably will hike maybe one more time this year, maybe early next year,” Roache added.
The latest decision to keep interest rates steady is “good news” for economies in the Asia Pacific region, Roache said.
With slowing global trade growth, Asian and other emerging markets will need to rely on domestic demand, which requires investment, he added.
“Investment typically means a wider current account deficit for these countries, and investment is also sensitive to interest rates,” Roache explained.
“On both counts, lower U.S. rates really helps these economies because it means they can run larger current account deficits, they can keep investment rates quite high,” he said. “That’s going to be very helpful for these economies that will be suffering, probably from slowing export growth as we go through this year.”