Waiting for the FED

By Isaac Cohen*

There is almost unanimous agreement among analysts that the Federal Reserve (FED) will increase the federal funds interest rate, to between 1 and 1.25 percent. Futures in Chicago were 89 percent for an increase of a quarter percentage point at the end of the next central bank meeting, in Washington DC on June 14. Moreover, preceded by increases in December and March, President John Williams of the Federal Reserve Bank of San Francisco said the expected monetary policy measure is the “most telegraphed” of our times.

So far this year, after another first quarter of weak economic growth, revised upward to 1.2 percent, the US economy is pulling out of the winter lethargy with growth expected, by the Federal Reserve Bank of Atlanta GDPNow model, to reach 3.4 percent in the second quarter of 2017. True, according to the Commerce Department, inflation increased 1.5 percent in the last 12 months, below the annual rate of 2 percent set by the central bank.

However, in support of an interest rate increase, the unemployment rate in May fell to 4.3 percent, from 4.4 percent in April, the lowest rate in 16 years and close to full employment. Even so, wages in May increased only 0.2 percent, for a yearly increase of 2.5 percent, evidence that there is space for expansion in the labor market.

*International analyst and consultant. Commentator on economic and financial issues for CNN en Español TV and radio, UNIVISION, TELEMUNDO and other media. Former Director, UNECLAC Washington.

About Ramón Jiménez

Ramón Jiménez, Managing Editor de MetroLatinoUSA.Com (MLN). Graduado de la Escuela de Periodismo de la Universidad del Distrito de Columbia (UDC). Email: [email protected]

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