Fed Rate Hike in June Unlikely

Fed

On Friday, June 3, 2016, the U.S. government reported that employers only added 38,000 jobs in May. The significant drop in hiring, an apparent temporary delay in the economic recovery, may push the Fed’s decision to raise interest rates back a few months. The unlikely event of a rate hike by the Fed’s in June could also mean a sharper increase if it does take place later this year. According to The New York Times, the unofficial unemployment rate dropped from 5 percent to 4.7. However, that figure results from more Americans leaving the labor force.

The dismal numbers from May were also affected by the over 30,000 Verizon workers that went on strike, and classified as unemployed by the US Labor Department. Despite the striking Verizon workers, the average monthly job gains have fallen far shy of the average of the last two years of 240,000. Janet Yellen, the Fed chairwoman, indicated in a recent speech that “in the coming months” it would be good to raise borrowing costs if market conditions continue to improve. However, a June rate hike is unlikely by the feds because their decisions are based on data. According to Market Watch, the May data gives the Feds a reason to wait until their meeting in July to reconsider their decision to raise the rate at that time.

 

By Jireh Gibson

The New York Times: Sharp Fall in U.S. Hiring Saps Chance of Fed Rate Increase in June
Market Watch: June’s out for a Fed rate hike and July’s on life support, analysts say
Top Image Courtesy of Day Donaldson’s Flickr Page – Creative Commons License
Featured Image Courtesy of International Monetary Fund’s Flickr Page – Creative Commons License

One Response to "Fed Rate Hike in June Unlikely"

  1. Pingback: Fed Rate Hike in June Unlikely | The Truth Will Prevail | Unify News

Your Thoughts?