The Fed Raise Interest Rates Next Week. The central bank of the United States, the Federal Reserve or The Fed, is projected to raise its benchmark interest rate at a meeting next week following strong US labor market data.
The US Department of Labor reported the number of people filing new claims for unemployment benefits fell last week, although the decline was likely exaggerated by the data’s difficulty adjusting to seasonal patterns.
Claims for new unemployment benefits fell by 9,000 to 228,000 last week. Meanwhile, continuing jobless claims rose 33,000 to a level of 1.754 million. New jobless claims were well below the 280,000 level which economists said would indicate a significant slowdown in job growth given the size of the US labor market.
Given this data, markets are expecting the Fed to raise interest rates for the last time at the end of its July 25-26 policy meeting next week.
BMO Capital Markets analyst Ben Jeffery said the jobless claims data, along with solid retail sales on Tuesday, was pushing up US Treasury bond yields on the notion that the Fed will keep interest rates higher for a longer time.
“There is still the possibility of an increase in the benchmark interest rate in September. This may indeed have been planned by the Fed,” said Jeffery.
He continued, to keep financial conditions tight enough to continue fighting inflation, the Fed will want to ensure that there are no rate cuts this year.