US Fed on payroll watch

The US is likely to see an interest rate rise either late this year or in 2016, due to a sharp slowdown in the fi rst quarter.

A harsh winter brought US growth almost to a halt in the first quarter. April’s non-farm payrolls report, due on Friday, will signal whether the US is faring better.

The Federal Reserve has put in place a meeting-by-meeting approach on the timing of its fi rst rate hike since June 2006, making such a decision solely dependent on incoming economic data.

Last week it downgraded its view of the US labour market and economy.

“They will need better data to justify a rate hike, and that need is pushing the timing of a policy change ever-deeper into 2015,” said Tim Duy, a professor at the University of Oregon.

“There just isn’t that much data between now and June to move the needle on policy. You need the jobs and inflation data to turn sharply better to pull the Fed back to June.” – Reuters

They will need better data to justify a rate hike...