We expect the Fed to leave interest rates unchanged at next week’s FOMC meeting but, in what could be characterised as a “hawkish skip”, to signal via forward guidance (updated SEP forecasts and language in the statement) that officials are minded to hike interest rates again, probably at the following meeting in late-July. We suspect the recent resilience of employment and stickiness of core inflation will ensure that the Fed delivers that rate hike as planned next month. But with the activity data showing increasing signs of weakness and better news on core inflation coming soon, we also anticipate that being the last rate hike in this cycle, although we now don’t expect the first rate cut to come until next year.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services