WASHINGTON (6/17/15)--While few expect the Federal Open Market Committee (FOMC) to raise the federal funds rate during its two-day policy-setting meeting, which ends today, many expect Chair Janet Yellen and company to send a clear message that higher interest rates are right around the corner (MarketWatch June 16).
Some analysts believe a small chance exists that the Federal Reserve’s monetary policy-making body may choose July’s meeting as the lift-off point, but the majority of expectations fall on a September hike.
That is, “unless something unusual happens,” Carl Tannenbaum, Northern Trust chief economist, told MarketWatch.
Still, experts say that even if the FOMC tips its hand about forthcoming rate hikes, it will not cite a specific meeting date.
“Those looking for some type of concrete message that September is effectively a done deal will likely be disappointed,” said Michael Cloherty, head of U.S. rates strategy at RBC Capital Markets.
For the FOMC to raise rates in September, the economy may have to start churning out a higher rate of inflation, which some believe is possible.
Lou Crandall, chief economist, Wrightson ICAP, for example, said that wage pressure may rise by the Fed’s September meeting.
Further, once the Fed does decide to raise rates, the FOMC has said the pace at which they will climb will be quite slow.