The Federal Reserve is signaling that it will likely take action on increasing interest rates in two months, despite recent data that shows a weakened economy. This would be the first rate increase since 2006.
Two central bank officials said Wednesday that disappointing job growth, manufacturing activity, and retail sales over the winter had pushed rate hike expectations to later in the year. For more than six years, the Fed has held rates near zero. But June is being viewed as the likely month for the Fed to start its rising of rates.
“I could imagine circumstances where a June rate hike could still be in play,” says William Dudley, New York Fed president, and a voting member on the Fed’s policy committee. “If the economy’s strong, the unemployment rate is dropping, wages are rising, and the outlook is good, you could conceivably get to that point. The bar is probably a little bit higher” for a June hike given recent data. What are your comments?
Source: “Fed Officials Say June Rate Hike Still in Play, Hinges on Data,” Reuters (April 9, 2015) and “What an Interest Rate Increase Means for Real People,” CNNMoney (March 19, 2015)