New | US Fed signals strongly interest rate hike on the table in June

US Federal Reserve officials said it would be appropriate to 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 their policy meeting last month.

That view, expressed by most of the Fed’s policy-setting committee at the April 26-27 meeting, suggests the US central bank is closer to lifting rates again than Wall Street had expected.

The policymakers said recent data made them more confident inflation was rising toward the Fed’s 2 per cent target, and that they were less concerned about a global economic slowdown, according to the minutes, which were released on Wednesday.

“Most participants judged that if incoming data were consistent with economic growth picking up in the second quarter, labour markets continued to strengthen, and inflation making progress toward the committee’s 2 per cent objective, then it likely would be appropriate for the committee to increase the target range for the federal funds rate in June,” according to the minutes.

Prices for futures contracts on the Fed’s benchmark overnight lending rate implied that investors saw a 34 per cent chance of a rate increase next month, up from 19 per cent shortly before the release of the minutes, according to CME Group.

US stocks pared gains and the dollar extended gains against a basket of currencies after the minutes were released. Treasury yields rose, with the yield on 30-year U.S. government debt rising to a two-week high.