The US Federal Reserve is likely to keep interest rates on hold tomorrow, and is unlikely to raise them again until September, despite retail sales growth and increasing core inflation, says AMP Capital.
The looming threat of a Brexit, following the June 23 vote in the UK, and its potential to disrupt the economy made a June rise all but impossible, but AMP Capital’s head of investment strategy and chief economist Shane Oliver says any movement before September is unlikely.
A “lack of urgency” in comments from US Federal Reserve chair Janet Yellen, coupled with “disappointingly weak” employment data suggest interest rates will stay put, Mr Oliver said.
In a note to investors, he said the Federal Reserve is expected to remain “cautious” about rate rises given low inflation and uncertain growth.
“Given a likely desire to see clear evidence that US activity indicators and jobs have picked up, the Federal Reserve is more likely to wait till September before moving again,” he said.