US interest rate rise imminent – hike by Fed expected in summer
Atlanta Fed President Dennis Lockhart says the Federal Reserve Board of Governors will raise the interest rates in summer. Lockhart believes that more evidence provided by macroeconomic indicators is still needed to support such a decision. “I continue to believe that all meetings from June onward should be on the table,” the official said in an interview to The Wall Street Journal.
Meanwhile, New York Fed President William Dudley advises to be cautious in regard to the start date and hike pace of the interest rates. Dudley says that inflation will be lower than the target level of 2% for some time. The Fed Board of Governors can make a decision on the base rate hike at any June meeting, San Francisco Fed President John Williams points out. Moreover, Williams is sure about good prospects for the US economy, especially its labor market. The official also said that the central bank’s interest rate decision is based on the stability of the US economy.
US Fed Chair recently flagged the rate hike on a “meeting-by-meeting” basis
Global markets are anticipating one of the game-changing financial events of the year. Experts are speculating about a possible deadline and watching closely every testimony of the US Federal Reserve Chair.
Yes, that crucial event is the interest rate hike. In contrast to her predecessor Ben Bernanke, Janet Yellen is very cautious in speeches trying to avoid straightforward statements on a future monetary policy. Some analysts spotted the US Fed Chair waning fears about a possible interest rate hike in the short run when she was testifying to the Senate Banking Committee.
In her speech, Janet Yellen also highlighted the need to streamline the monetary policy’s terms. “The FOMC’s assessment that it can be patient in beginning to normalize policy means that the Committee considers it unlikely that economic conditions will warrant an increase in the target range for the federal funds rate for at least the next couple of FOMC Meetings,” news agencies quote Janet Yellen as saying. Importantly, in case the US Fed is certain of obvious improvements in the economic fundamentals, the regulator retains the right to start discussing a gradual increase of interest rates at any meeting on schedule. Besides, the Federal Open Market Committee amended the forward guidance on its assessment of a further monetary policy. Such a decision reflects the feedback of the Fed officials to economic recovery which has nearly reached the target indicators. So, the interest rate hike is just around the corner.