Economists Side with El-Erian on 80% Chance of Fed September Rate Hike

Some economists are siding with Allianz’s Mohamed El-Erian, who on Tuesday said he sees an 80 percent chance the Federal Reserve raises interest rates in September if Friday’s jobs report comes in strong.

“I think he makes a good point. I think the Fed is actually pretty dovish, but they’re data-dependent and they want to keep their credibility,” Randy Anderson, chief economist at Griffin Capital, told CNBC’s “Squawk Box” on Wednesday.

The Fed has signaled it will raise rates at least once this year, after backing off earlier expectations for four increases. The central bank has not moved since December, when it lifted its benchmark Fed funds rate by a quarter of a percent from near zero.

Anderson said he believes the Fed would prefer to wait until its December meeting, but policymakers don’t want to risk missing their window to raise rates in 2016. That could happen if they hold off in September and are then delayed by some exogenous event like Britain’s surprise vote in June to leave the European Union, he said.

A third consecutive month of employment gains in excess of 200,000 positions could provide an excuse to move, according to Anderson.

via CNBC

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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 has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. 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