Fed signals interest rate hike firmly on the table for June
Source: Reuters
Markets | Wed May 18, 2016 2:05pm EDT
Fed signals interest rate hike firmly on the table for June
WASHINGTON | By Jason Lange and Lindsay Dunsmuir
The Federal Reserve will likely raise interest rates in June if economic data points to stronger second-quarter growth as well as firming inflation and employment, according to minutes from the U.S. central bank's April policy meeting released on Wednesday.
That view, expressed by most Fed policymakers at the last policy meeting, suggests the central bank is much closer to lifting rates again than Wall Street expects.
Prices for futures contracts on the Fed's benchmark overnight lending rate on Wednesday implied that investors only saw a 19 percent chance of a rate increase next month.
Read more: http://www.reuters.com/article/us-usa-fed-idUSKCN0Y92IU
Adam Shell, USA TODAY 2:36 p.m. EDT May 18, 2016
Stocks fell sharply and turned negative after the minutes from the latest Federal Reserve meeting showed most policymakers favor an interest rate hike in June if economic data improves, a message that caught complacent and incorrectly positioned investors off guard.
The Dow Jones industrial average was down about 100 points, or 0.6% after being up about 80 points just prior to the release of the Fed minutes.
The broader Standard & Poor's 500 stock index was down 0.6% after being up about 0.5% before the Fed news broke. The S&P 500 again dipped back into the red for 2016. The Nasdaq composite, which started the day down 9.6% off its July 2015 record high and in danger of falling into correction territory again, was off 0.2%.
Wall Street was anxiously awaiting the release of the minutes of the Federal Reserve's April 26-27 meeting on interest rates for clues as to the Fed's next move. The Fed has held off on rate hikes so far in 2016, after raising rates in December for the first time in nearly a decade. Wall Street is still unsure of what further rate hikes might mean for the economy and stock market.
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