Stronger-than-expected US growth, employment, and private consumption data are pushing the Federal Reserve toward a rate hike as early as next month, against President Trump's pressure for lower rates, according to Mizrahi Tefahot chief economist Ronen Menachem. Markets now price a one-in-three chance of a rate increase in July.
New US economic data released Thursday shows growth, employment, and private consumption running stronger than analysts had estimated, according to a report by Channel 12's Lior Bakalo citing Mizrahi Tefahot chief economist Ronen Menachem. The figures are pushing the Federal Reserve toward a rate hike as early as next month, markets now pricing a one-in-three probability of a July increase.
The development places the Fed on a collision course with President Donald Trump, who has publicly pressed for lower interest rates. The data comes amid a broader economic picture that The Zioneer has previously covered: US inflation hit 4.2% in May, with core inflation at 2.9%, while gasoline prices surged 40.5% year-on-year. A Fox News poll published Thursday found only 31% of Americans satisfied with Trump's handling of the economy.
Menachem's assessment suggests the Fed may prioritize inflation control over political pressure, potentially raising rates for the first time since the current tightening cycle paused. The one-in-three market probability reflects significant uncertainty, with the outcome likely hinging on the next CPI report and Fed chair Jerome Powell's upcoming testimony.
2 developments
- StrongUS reportedly preparing another wave of strikes, target list includes Iranian power plants
- DevelopingTrump approval near career low as Americans fear rising fuel prices
- StrongU.S. inflation hits 4.2% in May, core at 2.9% — energy prices lead surge
- DevelopingS&P 500 rallies 1.7% on hopes for US-Iran oil deal
Source and signal
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