Will they or won’t they? That’s what markets are wondering after a disappointing United States jobs report in May.
According to the CME Group FedWatch tool, the market thinks there’s a six percent chance of the Federal Reserve raising interest rates this month. The market also pegs a July rate hike at 37 percent. But if you listen to Fed Chair Janet Yellen’s remarks you’d think the U.S. central bank was certainly going ahead with a boost to interest rates.
Yellen told an audience at the World Affairs Council of Philadelphia in Philadelphia that it’s still “appropriate” to gradually raise rates because “positive economic forces have outweighed the negative” in the U.S.
Although she did downplay all of them, Yellen listed four threats to the U.S. economy: sluggish demand, lower productivity, inflation risks and overseas economic threats.
“If incoming data are consistent with labor market conditions strengthening and inflation making progress toward our two percent objective, as I expect, further gradual increases in the federal funds rate are likely to be appropriate and most conducive to meeting and maintaining those objectives,” Yellen said to the Philadelphia audience.
In December, the Fed raised rates from near zero for the first time in close to a decade. The Federal Open Market Committee (FOMC) is scheduled to meet on June 14 and 15 to discuss interest rates and a myriad of other economic matters.
The Bureau of Labor Statistics (BLS) reported that just 38,000 jobs were created last month.
JRATT says
If they raise interest rates another .25%, it will mean another $1.15 in interest on my credit card debt per month. As my balances comes down it will not effect me much. When these increases are slow I do not see much of a problem on short term debt. But when it reaches 3 to 5 percent it could really slow down car and home sales. If it tanks the economy over time, then the FED will have to lower rates again to get us out of the next recession.