Fed Rate Hike Bets Range From June To December
Disappointing data from the U.S. coupled with uncertainty about how inflation will progress has given analysts reason to doubt their predictions for when the U.S. Federal Reserve will raise interest rates.
While most are still betting that the bank will tighten within the year, expectations for when the increase will take place are all over the map.
Yellen's Remarks Conflicting
At the beginning of March, markets were abuzz with June rate hike predictions. When the bank dropped the word "patient" from its policy statement, many investors began to believe that the Fed was considering raising rates over the summer.
But days later, Fed Chair Janet Yellen remarked that removing that word didn't mean the bank was going to be impatient, and they would take a "gradualist approach" to raising rates.
Following Yellen's remarks, labor data from the U.S. showed a slowdown in hiring, prompting many to revise their projections for a rate hike. A Wall Street Journal poll conducted this week showed that 65 percent of the economists surveyed are now expecting rates to rise in September.
However, Reuters reported that futures traders predicted a December hike when surveyed on Tuesday, but shifted their bets to October the following day.
June Still A Possibility
Fed official William Dudley remarked on Wednesday that a June rate hike is not out of the question. He said that data reports over the next two months will be crucial in determining whether or not the economy can withstand a rate hike and that raising rates in June is still a possibility.
Wells Fargo Investment Institute's Scott Wren told CNBC that he expects the bank to raise rates twice in the coming months, with the first increase coming in September. However, during the same interview, Citi's chief economist told CNBC that a December increase is most likely.
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