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FINANCE

Will the Fed raise interest rates again in July? This is what experts say

The Federal Reserve held off on raising interest rates when they held their June meeting, but will they continue to do so this month? Here’s what to expect.

Update:
The Federal Reserve held off on raising interest rates when they held their June meeting, but will they continue to do so this month? Here’s what to expect.
Kevin LamarqueREUTERS

The Federal Reserve skipped raising interest rates in June, but now it appears that there will be another hike later this month. There remains a slim likelihood that there will be no change, but a rate increase will be in line with projections of both the market and the Fed itself.

The minutes of the Fed’s last meeting show that some officials were pushing for increases of a fourth of their percentage points in June, while others indicated that they could have supported such a move.

All 11 voting members of the committee that sets interest rates agreed to hold off on increasing rates when they met on June 13-14. However, they also expressed that they could hike the rates two more times within the year.

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Federal Reserve meeting minutes point to future hike

Chief economist at Oxford Economics Ryan Sweet that the minutes of the Federal Reserve’s last meeting indeed point to another increase, per CBS News. Sweet says that it is not usual for the agency to state in the records that some parties were not in total agreement with the group’s decision. This, he says, could mean that the central bank is set to continue tightening monetary policy.

The Fed continues to have concerns that inflation is taking too long to reach the 2% target, making it likely that they will maintain high interest rates to fight off price increases.

The CME FedWatch Tool, which analyzes the probabilities of changes in the Fed rate, shows that there is a strong likelihood that a hike will take place during the July meeting.

Meanwhile, Fed chief Jerome Powell, in testimony before Congress, said there is a long way to go in the battle against inflation, and that they expect to increase rates before the year is over. Many indicators are indeed signaling another hike, and the Federal Reserve may give more clues about the way their decision would go in the weeks running up to their meeting.