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Fed Signals Suspension of Interest Rate Hikes at June Meeting Amid Turmoil in Markets and Hot Jobs Report

Federal Reserve officials have signaled that the Federal Open Market Committee (FOMC) meeting on June 13-14 will suspend interest rate hikes and leave the card to resume interest rate hikes after that. sent in succession. The market is in turmoil ahead of the release of employment statistics in May.

Fed Governor Jefferson Suggests Suspension of Rate Hike in June – Doesn’t Mean End (2)

Jobs data has long been viewed on Wall Street as a key piece of data that influences monetary policy. But after Fed Governor Jefferson’s remarks yesterday, markets priced in a roughly 35% chance of a rate hike at this month’s meeting, down sharply from just under 60% the day before.

“There is no doubt that this is a signal, and it is highly likely that this signal is perfectly aligned with Chairman Powell,” said Rubira Falqui, chief U.S. economist at High Frequency Economics. “Just by looking at the market reaction to pricing, it’s clear that message is being delivered,” she continued.

Source: Bloomberg

Powell has said in the past that he believes there is room to wait for data and changing outlooks in making monetary policy decisions.

FOMC Raises Rates by 0.25 Points – Chairman Powell Suggests Suspension (3)

  “In practice, by forgoing a rate hike at its next meeting, the FOMC will be able to see more data before deciding on the extent of further tightening,” Jefferson said yesterday.

US Employment, Wage Growth Probably Moderated in May

Source: Bureau of Labor Statistics, Bloomberg


But not everyone agrees with the moratorium on rate hikes. Economists at Monetary Policy Analytics, including former Fed Governor Lawrence Meyer, said in a report earlier in the day that the market was “overinterpreting” Jefferson’s remarks. With the number of job openings increasing in April, we see a relatively high chance of an interest rate hike in June.

U.S. job openings reach 10.1 million in April, highest in 3 months

2023-06-01 19:03:00
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