The market had at one time priced in the eventuality of a U.S. rate hike in June. The Federal Open Market Committee (FOMC) will meet with little to no expectation of a rate hike that is now forecast to occur in September or October. The September FOMC meeting has a bit of an edge, because like the June meeting, it has a press conference scheduled after the release of the bank’s monetary policy statement. October might work better in terms of timing, but it is unclear if the Federal Reserve would want to announce the highly expected interest rate hike with no chance for a Q&A.
The World Bank joined the International Monetary Fund in warning the Fed about hiking rates too soon. The World Bank’s bi-annual Global Economic Prospects report highlights the risks to the global economy, and in particular emerging markets if higher rates arrive before the U.S. economy is ready for them. So far the data out of the U.S. have been mixed at the best of times. Employment remains the strongest indicator, with positive surprises like the jump in U.S. retail sales in May.
Investors and market watchers will be awaiting the statement from the FOMC to seek clues about what the Fed has in store down the line, as the June meeting has already been discounted as the chosen one for the what despite the warnings will be an imminent arrival of higher rates.
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Alfonso Esparza
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.
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