The Federal Reserve Governor Philip Jefferson is leaning towards a rate hike “skip” in June, but pointing out that a decision to hold policy rate at a coming meeting should not be interpreted to mean that the central bank has reached the peak rate for this cycle.
The statement prompted a quick reversal of market expectations for another rate hike as the U.S. central bank weighed their decisions against still strong inflation data.
He noted that skipping a rate hike would allow them to have more time to assess the economy and holding rates in June does not mean hikes are done.
Philadelphia Fed President Patrick Harker also has the same thought as Jefferson for a skip.
The market is now pricing in just nearly 28% chance of a rate hike in June after Jefferson’s statement.
The U.S. Consumer Price Index rose 4.9% in April from a year earlier, less than the 5% expectations from the market. Still, it is higher than the 2% target that the central bank is looking for, but fear that a sharp raise in rates could bring the economy into recession, while banks pull back on credit.