Investors Do Not Expect The Federal Reserve To Raise Rates This Year Or Next

Investors Do Not Expect The Federal Reserve To Raise Rates This Year Or Next

 A surge in US hiring will not be enough to prompt a Federal Reserve interest rate rise this year or next, investors believe, as ripple effects work their way across the Atlantic.

Figures released on Friday are set to show that the US created 180,000 jobs in June, rebounding from the worst jobs report in five years, as the economy added just 38,000 positions.

"The fallout from Brexit makes a 2016 rate hike unlikely" per James Smith

Fed officials had said that they would be watching the labour market data for signs of improvement, which central bank watchers believed could encourage a rate rise in the coming months.

However, the UK’s referendum result has suppressed hopes for higher rates. Janet Yellen, the Fed chairman, said last month that a Brexit would bring a “period of uncertainty” and the possibility of “a period of financial market volatility that would negatively affect financial conditions and the US economic outlook”.

Neil Mellor, a BNY Mellon strategist, said that the vote had “compounded doubts that the Fed will be able to hike rates this year at all, let alone implement the two hikes [it had] notionally penciled in”.

Source: Peter Spence, Economics Correspondent

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Dated: July 4th 2016
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