NATIONAL NEWS

Federal Reserve likely to skip interest rate hike at next meeting in June, officials signal

May 31, 2023, 4:28 PM | Updated: 4:50 pm

WASHINGTON (AP) — Leading Federal Reserve officials are sending out stronger signals that they will forego an interest rate increase at the central bank’s next meeting in June, though they indicate hikes could resume later this year.

“Skipping a rate hike at a coming meeting would allow (Fed policymakers) to see more data before making decisions” about whether to further increase rates, said Fed Governor Philip Jefferson in a speech Wednesday. Philadelphia Fed President Patrick Harker made similar comments Wednesday.

Jefferson has been nominated by President Joe Biden to be the Fed’s vice chair, though he has yet to be confirmed by the Senate. But his nomination places him close to the center of Fed policymaking.

Including Jefferson, three top Fed officials have been united in support of the idea of skipping a rate hike in June, despite disappointing inflation report last week.

On May 19, Fed Chair Jerome Powell hinted that he also supported pausing rate hikes at the June meeting, to give the Fed time to evaluate the economic impact of its previous rate increases.

And John Williams, president of the Federal Reserve Bank of New York, another key member of the Fed’s leadership, has also indicated he would prefer to hold off from lifting rates at the June meeting.

“All the pieces of a skip are here and told more forcefully than in past weeks,” Tim Duy, chief U.S. economist at SGH Macro Advisors, said.

The Fed has implemented 10 straight rate hikes over the past 14 months, pushing its benchmark interest rate to about 5.1%, the highest in 16 years. The rate increases have made mortgages, auto loans, credit card borrowing, and business loans more expensive. Fed officials hope that higher rates will slow spending, cool the economy, and bring down inflation.

Tough talk on inflation from other Fed officials continued this week. Loretta Mester, president of the Cleveland Fed, expressed support for another hike in June during an interview published Wednesday in the Financial Times.

“I don’t really see a compelling reason to pause — meaning wait until you get more evidence to decide what to do,” she said. “I would see more of a compelling case for bringing (rates) up.”

And last Friday, a report showed that U.S inflation picked up to 4.4% in April, compared with a year ago, up from 4.2% in March, according to the Fed’s preferred inflation measure. That is far above the Fed’s target of 2%. Excluding the volatile food and energy categories, core prices rose 4.7% from a year ago, also higher than the previous month.

The inflation figures and comments from officials such as Mester caused Wall Street traders to put the odds of a rate hike in June as high as 70% early Wednesday.

But Jefferson’s remarks, as well as similar comments by Harker, reversed traders’ expectations, with markets pricing in 65% odds of no hike in June later Wednesday afternoon.

“I am definitely in the camp of thinking about skipping any increase in this meeting,” Harker said. He is a voting member of the Fed’s interest-rate setting committee this year, while Mester is not.

Both Jefferson and Harker were much more explicit, however, than Fed officials have been previously about their willingness to return to rate hikes at upcoming meetings, should inflation show few signs of declining.

“A decision to hold our policy rate constant at a coming meeting should not be interpreted to mean that we have reached the peak rate for this cycle,” Jefferson said.

“We might have to do more in subsequent meetings,” Harker said. “And I’m … willing to do that, but I want to give it a little bit of time.”

National News

Wall Street Journal reporter Evan Gershkovich stands in a glass cage in a courtroom in Yekaterinbur...

Associated Press

U.S. reporter Evan Gershkovich appear in court in Russia for hearing on espionage charges

Wall Street Journal reporter Evan Gershkovich appeared in court in Russia on Thursday for the second hearing in his trial on espionage charges, the court said. Gershkovich, his employer and the U.S. government vehemently deny the charges against him. Gershkovich was accused by the Russian Prosecutor General’s office of “gathering secret information” on orders from […]

4 hours ago

FILE - A pedestrian traverses the rotunda inside the New Mexico Capitol, March 16, 2023, in Santa F...

Associated Press

New Mexico governor cites ‘dangerous intersection’ of crime and homelessness, wants lawmakers to act

SANTA FE, N.M. (AP) — Citing what she calls the “dangerous intersection” of crime and homelessness, New Mexico’s governor is calling on lawmakers to address stubbornly high crime rates as they convene Thursday for a special legislative session. In issuing her proclamation, Gov. Michelle Lujan Grisham talked about a vulnerable segment of society that falls […]

6 hours ago

Republican presidential candidate former President Donald Trump arrives on third day of the Republi...

Associated Press

FACT FOCUS: Trump, in Republican convention video, alludes to false claim 2020 election was stolen

DONALD TRUMP, alluding that the 2020 vote was stolen: “Whether you vote early, absentee, by mail or in person, we are going to protect the vote. That’s the most important thing we have to do is protect the vote. Keep your eyes open because these people want to cheat and they do cheat. And frankly, […]

6 hours ago

Supporters cheer as Republican presidential candidate former President Donald Trump arrives for a c...

Associated Press

‘One screen, two movies’: Conflicting conspiracy theories emerge from Trump shooting

WASHINGTON (AP) — A former president is shot, the gunman quickly neutralized, and all of it is caught on camera. But for those who don’t believe their eyes, that’s just the start of the story. For some supporters of former President Donald Trump, the failure of the Secret Service to prevent the attempted assassination point […]

6 hours ago

Associated Press

Hundreds attend vigil for man killed at Trump rally in Pennsylvania before visitation Thursday

SARVER, Pa. (AP) — Hundreds of people who gathered to remember the former fire chief fatally shot at a weekend rally for former President Donald Trump were urged to find “unity” as the area in rural Pennsylvania sought to recover from the assassination attempt. Wednesday’s public event was the first of two organized to memorialize […]

6 hours ago

California delegate T. Tran holds his phone with an image of Republican presidential candidate form...

Associated Press

What to watch as the Republican National Convention enters its fourth day in Milwaukee

MILWAUKEE (AP) — The Republican National Convention culminates Thursday with former President Donald Trump expected to accept the party’s presidential nomination, achieving a comeback four years in the making and anticipated even more in the past week in light of Saturday’s assassination attempt. Trump is expected to accept his third consecutive party nod in prime […]

6 hours ago

Federal Reserve likely to skip interest rate hike at next meeting in June, officials signal