The FederalReserve is expected to raise interest rates again at its next meeting later this month despite a weaker-than-expected June employment report.
The economy added 209,000 jobs in June, the Bureau of Labor Statistics reported Friday. That was below forecast expectations of 225,000, and it was the first report in months that came in below the consensus prediction. It was also the slowest pace of job growth since December 2020.The Fed is walking an interest-rate tightrope with its program of quantitative tightening. If it tightens too little, inflation suppression could be unsuccessful, and higher prices may stick around for longer.
As of Friday, investors assigned a more than 92% chance that the Fed will raise rates in July, according to CME Group’s FedWatch tool, which calculates the probability using futures contract prices for rates in the short-term market targeted by the Fed. That is actually up slightly from the day before and up from more than 86% a week ago and just over 50% a month ago.
The Fed’s updated projections that were released following its June meeting showed that Fed officials expect two more rate increases over the next year, more than penciled in during the spring. That update came as a surprise for some Fed watchers at the time.
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