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No rate hike expected from Fed until late year

By MARTIN CRUTSINGER, AP Economics Writer
Published: July 25, 2016, 4:49pm

WASHINGTON — On again. Off again. On again?

Anyone trying to peg the likelihood of a Federal Reserve interest rate hike this year has been subject to a topsy-turvy shift of expert opinion the past few months. And when the Fed holds its latest policy meeting this week, few think it will provide much more clarity.

A few months ago, it was widely assumed that the Fed would have resumed raising rates by now. But that was before the U.S. government issued a bleak May jobs report and Britain’s vote to quit the European Union triggered a brief investor panic. Since then, though, a resurgent U.S. economy, a bounce-back in hiring and record highs for stocks have led many economists to predict a Fed move by December if not sooner.

After its meeting ends Wednesday, the Fed will issue a statement that may point, in particular, to signs of a strengthened job market: In June, employers added 287,000 jobs, the most since October 2015. But the Fed will probably also acknowledge continued uncertainty about the consequences of Britain’s exit from the EU. Most economists think the statement will remain mum about the next rate hike.

Some think they may decide to raise rates when it meets in September, especially if economic figures that emerge in the next months show solid hiring and a rebound from a slump in economic growth early this year.

“We have just come through too much volatility for the Fed to be able to reach a definitive conclusion about raising rates in July, but by September they will have more data,” said Sung Won Sohn, an economics professor at California State University, Channel Islands.

In December, the Fed raised its benchmark rate from a record low near zero, where it had stood since the depths of the 2008 financial crisis.

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