It’s a moment we’ve been waiting for since December, when Yellen first announced that the US would be looking forward to 4 Interest rate hikes. The overall impression was that Global economic signals looked promising, despite oil prices being at a low market sentiments were up.
Now we wait in May for the first hike, and with so much global economic uncertainty is there any hopes of a hike in June?
US economy improving
It started last Friday when retail sales came in much stronger than anticipated, and then on Tuesday US Consumer price index figures and manufacturing data came in strong. These are some of the strongest figures we’ve seen since 2015 but is it enough to secure a rate hike in June?
The UK had a strong run this morning with a number of retail figures showing strong growth, despite poorer than anticipated Consumer price index data on Tuesday. Data appears to be mixed at present.
The Eurozone appears to be struggling with the likes of Greece draining on the economy, GDP figures for Q1 came in poorer than expected and Consumer price figures scraped expectations. Given that Draghi has on a number of occasions highlighted that the QE program is working, it would difficult to justify given the mixed economic data.
What are the odds of rate hike in June?
Despite improvements within the US economy, I personally feel that it is far too early to jump to any conclusions, US data still shows mixed figures and bearing in mind that the Eurozone, China and Australia are all struggling I suspect that the US will hold off until after the US election, if we even see a rate hike at all.
I would not get any hopes up of a FED hike in June, the data doesn’t support it just yet.