Market analysts say U.S. rate hike likely in December

Market analysts say U.S. rate hike likely in December


Eyes are on whether the U.S. Federal Reserve
will announce a rate hike in September,… following Janet Yellen’s recent remarks that
the case for raising rates has strengthened. However, market watchers say a hike in December
is more likely. Kim Min-ji reports. Could a U.S. rate hike be on the horizon? Fed Chair Janet Yellen said last Friday that
the case for an increase had strengthened in recent months,… thanks to improvements
in the labor market and expectations for solid economic growth — raising speculation a hike
is in the pipeline. Although Yellen did not specify the timing,…
she said the U.S. was nearing the Fed’s goals of maximum employment and price stability. “She’s obviously looking at labor market conditions. And I think, specifically, the impact that
stronger, tighter job market might have on the prospect for rising wages. So I think, she is excepting that economic
conditions are supportive of a rate hike.” However, most watchers believe a rate hike
will come toward the end of the year,… not at the Fed’s next meeting in September. CME Group sees the possibility of an increase
at 58 percent for December,… while Bloomberg forecasts a 62 percent chance. This as the U.S. still has to gauge the possible
fallout from Britain’s decision to leave the EU,… and because Europe and Japan are pursuing
negative interest rate policies. “We do think that she is okay with hiking
rates sometime in 2016, but the market’s perception of what’s going on today is that they’re more
inclined to hike in December than September.” The Fed raised its interest rates for the
first time in nearly a decade last December,… but has since kept its rate steady,… on
the back of a global slowdown,… market volatility and tepid economic data. The Fed has three more policy meetings scheduled
for this year. Kim Min-ji, Arirang News.

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