New | Weak US jobs report kills off hopes for June rate increase by Federal Reserve
Investors ditch budding hopes of a June rate liftoff as even July hike looks shaky
The argument for a June interest-rate hike from the Federal Reserve has evaporated.
Economists and investors largely agreed that Friday’s disappointing employment report for May -- the US economy added just 38,000 new jobs -- all but eliminated the chance that Fed officials would tighten policy when they meet June 14-15 in Washington, and may make it difficult for them to raise in July.
“Today’s labour market report is sobering and suggests that the laboir market has slowed,” Fed Governor Lael Brainard told an audience in Washington. “Prudent risk-management implies we should wait for additional data to provide confidence that domestic activity has rebounded,” said Brainard, who has previously argued for patience on raising rates.
Recent comments from other officials prior to the report, including Chair Janet Yellen on May 27, had signalled they were in favour of a rate increase in coming months. Yellen delivers remarks again on Monday, making her the last scheduled Fed official to speak publicly before the quiet period they typically observe the week before a Federal Open Market Committee meeting.
“I thought she would be kind of sealing the case for June,” said Stephen Stanley, chief economist at Amherst Pierpont Securities LLC in New York. “Maybe it’s time for her speech writers to plan a long weekend.”