Stronger-than-expected US growth, employment, and private consumption data published Thursday are pressuring the Federal Reserve toward a rate hike as early as next month, against President Trump's calls for lower rates. Mizrahi Tefahot chief economist Ronen Menachem says markets now price a one-in-three chance of a July increase.
New US economic data released Thursday showed growth, employment, and private consumption all exceeding analyst expectations, strengthening the case for a Federal Reserve rate hike as soon as next month. Mizrahi Tefahot chief economist Ronen Menachem noted that markets now price a roughly one-in-three chance of a July hike.
As The Zioneer reported on June 10, US inflation hit 4.2 percent in May — a three-year high — while gasoline prices surged 40.5 percent year-on-year and real income fell 0.7 percent. The fresh growth data complicates President Trump's push for lower rates, which he has argued would boost the economy amid ongoing tensions with Iran.
The Fed faces a widening gap between White House pressure and the inflation and growth signals that historically drive monetary tightening. Markets will watch next week for any shift in Fed guidance.
2 developments
- DevelopingUS GDP growth last quarter at 1.5%, well short of expectations
- DevelopingECB faces less pressure to raise rates in July as oil prices drop, sources say
- DevelopingNew Fed paper links Biden-era illegal immigration surge to higher home prices, rents
- DevelopingFederal Reserve holds US interest rates steady
Source and signal
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