FOMC likely to skip June but hike interest rates in July analysts say

The Federal Open Market Committee is expected this week to hold interest rates at a range of 5% to 5.25%, but the revised Summary of Economic Projections will likely signal at least one more rate hike this year. “We expect the Fed to leave the federal funds rate unchanged although both the post-meeting statement and the dot plot will likely emphasize that inaction this week should be considered ‘skipping a rate hike’ rather than putting an end to monetary tightening,” said David Kelly, chief global strategist at J.P. Morgan Asset Management. “Indeed, Fed communications could explicitly warn of a possible further rate hike in July.” Although Kelly believes cooling data through the July meeting should suggest “no further tightening is warranted.” Others disagreed about the future. “The Fed will need to remain committed to curbing inflation and be ready to raise the rates again and keep them elevated if necessary,” said Emin Hajiyev, senior economist at Insight Investment. Inflation, he said, will dictate policy, calling it “the overriding concern.”
Source: The Bond Buyer