A second interest rate hike in the U.S. may be appropriate fairly soon, if the economic data continued to live up to expectations, one of the Federal Reserve´s top officials said.
Advertisement
He added that the risks of waiting to raise rates were “not that great” and that he does not think the US economy is at a point where inflation is threatening to bubble over.
After looking at the five-year chart of the BMO MSCI Emerging Markets Index (ETF) (TSX: ZEM), it becomes quite clear that the fund benefits when the U.S. Fed is easing. “Depending on the incoming data and the evolving risks, another rate increase may be appropriate fairly soon”.
“I see all the other Fed presidents making comments and it seems to me like they want to raise rates in June”, said Walter Pehowich, executive vice president at precious metals wholesaler Dillon Gage Metals.
Assuming that the Fed felt sufficient progress had been made to warrant another rate increase, the Fed would only likely delay if this November’s election coincided with heightened economic uncertainty that weighed on the outlook or resulted in a material tightening of financial conditions. In April meeting minutes, the Federal Reserve stated the economy was strengthening and the probability of 2% inflation target would be more achievable in the near term.
Powell added Thursday that he sees reduced risks to the US from the global economy.
Advertisement
“Market-based forecasts of FOMC policy, in contrast, envision ‘almost no normalization, ‘ whereby the policy rate would be changed only a few times in the next several years”, Bullard said. However, he said the British referendum on European Union membership in June and building Chinese debt bring some concerns. Yellen’s remarks on Friday as well as those in a speech in early June will be closely parsed for clues about the Fed’s monetary policy stance going into its June 14-15 policy meeting.
