Federal Reserve holds rates steady at 1%, Wall St. eyes June meeting for possible hike

fed holds interest rate

The Federal Reserve put out a statement with their decision to hold rates at 1%.

The statement began: “Information received since the Federal Open Market Committee met in March indicates that the labor market has continued to strengthen even as growth in economic activity slowed. Job gains were solid, on average, in recent months, and the unemployment rate declined.”

This partially has to do with today’s number that showed unemployment number released by the Automated Data Processing incorporation exceeded the number of jobs added to the US economy last month by 1,000 jobs. This number is an early indicator of the number released on the first Friday of every month by the US government.

Federal Reserve meets consensus on Wall St. with no change

It is the consensus among analysts on Wall Street that the next rate hike will likely come in June. Those same analysts expected no change in today’s release. Analysts are looking for toward the June and September meetings as the most likely meetings that will produce rate hikes. Whether or not the market sees these expected hikes depends both on economic data released and the health of the stock market (as I alluded to in this earlier post.)

Skeptics believe it will be difficult to raise rates in the face of terrible data

As I mentioned in this article from two weeks ago, ” recent data delivered a huge miss in job creation (98k to 174k expected) and another huge miss in CPI (Consumer Price Index) which was -0.2% instead of the 0% expected. If that was not enough Retail Sales also missed by 0.2% and the Atlanta Fed is predicting that first quarter GDP will clock in at .5%. That puts the US on pace for a meager 2% GDP growth for the year.”

The actual government number for GDP came in slightly higher for the quarter on an annualized basis at 0.7%. Beating the Atlanta Fed’s number by 0.2% but still missing Wall Street’s number of 1.3%. The S&P 500 has so far shrugged off this GDP miss by holding steady in a 20 point range since its release.