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Rate hike in June? Fed seems to say, forget about it

The Federal Reserve building is shown in Washington.
Charles Dharapak | AP Photo
The Federal Reserve building is shown in Washington.

Rate hike in June? Forget about it.

I know, removing the statement that there would not be a rate hike in the next meeting theoretically still holds out the possibility there could be a hike in June.

But read the statement: this seems like a very small chance.

The Fed has told us when they will raise rates: 1) when it has seen further improvement in the labor market; and 2) when it is reasonably confident that inflation will move back to its 2 percent objective in the medium term.

In the statement, the Fed said that:

1) job gains have "moderated," economic growth "slowed," with growth in household spending declining and business' fixed investment softening, and repeated the housing recovery remains "slow;"

2) inflation is anticipated to remain low (below its 2 percent objective) for the near term.

In other words, the Fed has offered a fairly dovish (cautious) view of the economy, and inflation is also below its targets.

That sounds like a June rate hike is off the table.

Is there anything that could change this? We would have to have some bullish—and I mean really bullish—economic reports by now and the June 17 Fed meeting.

Specifically, April and May nonfarm payrolls would have to be up—big time. And March, which was a disappointment at 126,000, would have to be revised upward significantly.

We'd also likely need to see evidence that the rest of the economy is rebounding...that GDP is closer to, say, at least 2 to 2.5 percent rather than the 0.2 percent in the first quarter.

Finally, we'd need some darn fast moves up in the inflation indicators.

Doesn't this all seem a bit unlikely? I mean, I know the Fed loves to use the word "transitory factors" but betting on a June hike seems to be stretching credulity.

  • Bob Pisani

    A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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