May
27

Momentum in Wrong Direction for June Rate Hike?

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3d Illustration: Business and Finance. Raising interest rates inDespite last week’s media reports hinting at a June rate hike after the Federal Reserve’s May meeting, expect Janet Yellen and company to wait until March 2017 for an interest rate increase, according to Rajeev Dhawan of the Economic Forecasting Center at Georgia State University’s J. Mack Robinson College of Business.

“The Federal Open Market Committee dot charts are of interest to the press for their noise potential,” Dhawan wrote in his quarterly “Forecast of the Nation,” released (May 26). “These are submitted weeks in advance of the meeting and as such are purely opinions and not policy projections, resulting in confusion.”

Dhawan points to comments in the April FOMC that contradict the idea of a June rate hike.

“The FOMC said consumer sentiment was high, which is true, but it has been moderating since last fall,” Dhawan said. Combined with extreme volatility in the stock market and the political uncertainty surrounding the presidential primaries and upcoming elections, “the momentum indicator for confidence is not up, but down.”

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