Report signals optimism
Outlook raises prospect that interest-rate hike could come soon
Associated Press
WASHINGTON — The Federal Reserve said Wednesday that near-term risks to the U.S. economy have diminished, reviving the prospect that it will resume raising interest rates as soon as September.
The Fed noted that the U.S. job market has rebounded, with robust hiring in June after a deep slump in May. At the same time, the Fed said in a statement after its latest policy meeting that it plans to closely monitor global economic threats and financial developments to ensure that they don’t slow the economy.
The Fed seemed to be referring in particular to Britain’s vote last month to leave the European Union — a move that poses risks to the rest of Europe and to the global economy.
The central bank gave no specific timetable for when it might resume the rate hikes it began in December, when it raised its benchmark rate from a record low. But some analysts who had doubted that the Fed would be ready to raise rates as soon as September said Wednesday’s statement appeared to revive that possibility.
“The Fed is saying that nearterm risks have diminished, so that certainly puts September back in play,” said Brian Bethune, an economics professor at Tufts University.
Mr. Bethune said he still thought the Fed would wait until December before raising rates but that a September move was possible if hiring remains strong and the global economy and markets remain stable.
Greg McBride, chief financial analyst at Bankrate.com, noted that “the Fed gave a very upbeat assessment of the U.S. economy,