Fed Drops September Rate Hike

The Federal Reserve decided not to raise interest rates in June, but comments Wednesday suggests the long awaited rate hike could come in September.

“No decision has been made by the committee about the right timing of an increase, but certainly an increase this year is possible,” Fed chair Janet Yellen said in a press conference Wednesday afternoon.

Translation: The Fed expects the U.S. economy to be in a good place soon, but it’s still in “wait and see” mode. It especially wants to see “further improvement” in wage increases, the ability of part-time workers to find full-time jobs and inflation closer to its 2% target.
“We have made some progress,” Yellen underscored.

Economy getting on track: A Fed rate hike would be a healthy sign for the economy. It means the central bank believes the U.S. economy is almost back to full strength after six years of recovery from the Great Recession.

The U.S. economy expanded at a healthy rate of 2.4% last year. Policymakers had hoped this year would be even stronger, but the Fed’s latest prediction is for 1.8% to 2% growth. That’s another reason the Fed is still hesitant to raise rates.

via CNN

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza