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Prior to the subdued jobs report, the US Fed was readying markets for a rate hike in either June or July. Fed chair Janet Yellen, in her latest speech, did not reiterate that a rise in coming months might be appropriate.
She also stressed on the downside risks to the outlook of the US economy. But she believes that positive factors outweigh the negative factors. Yellen said the jobs report “was on balance” and believes that “one should never attach too much significant to any single monthly report”.
Therefore, it appears that the Fed has taken in a wait and see stance and it seems too early for the central bank to significantly alter the economic outlook. The US Fed is expected to hike rates in September but the risks are presently tilted towards a later hike as it will need an improvement in employment and that the UK stays in the EU, said Danske Bank in a research report.
If this happens, the central bank might caution the markets during its July meeting for an upcoming hike in September. If there is no possibility of a hike in September, December seems to be the next possibility. If the UK votes to exit the EU, the second rise in rates might be delayed even further, according to Danske Bank.
