Fed to hike rates in September, December: HSBC

THE US Federal Reserve cannot wait too long before it starts hiking rates, said Julien Seetharamdoo, chief investment strategist of HSBC Global Asset Management, in an interview with The Business Times on Tuesday morning.

He was speaking ahead of this week's Federal Open Market Committee (FOMC) meeting, which ends on Wednesday. Rate hikes could take place in September and December - but not June because the Fed might take more time to prepare the ground, he said.

"We do feel the Fed is going to increase more than what is currently priced in," he said.

"If you look at surveys of businesses, they are reporting that it's becoming harder to find suitable workers. In the more skilled segment, there are definite pressures emerging," he said.

March projections by Fed officials are for rates to be between 0.5 per cent and 0.75 per cent by end-2015 - or two 25 basis-point hikes from the current 0 to 0.25 per cent. The June meeting is not expected to result in a hike. Slow US gross domestic product (GDP) growth in the first quarter has led to some analysts scaling back expectations of rate hikes this year.