Fed: Less inclined to raise interest rates in June - Rabobank

Jane Foley, Senior FX Strategist at Rabobank, notes that it was a softer than expected headline figures in the US April Labour market report.

Key Quotes

“The initial inference was that the Fed will be less inclined to raise interest rates in June. The futures market is currently suggesting that the probability of such a move is just 8% compared 10% on Friday morning. Non-farm payrolls climbed by a just 160K, the smallest gain since last September. That said, the uptick in average weekly hours worked to 34.5 hrs and in the increase in average hourly earnings to 2.5% y/y provided the silver lining in the report.

Despite the weaker than expected growth in April non-farm payrolls, the Federal Reserve’s Dudley continued with the more hawkish tone that has been associated with FOMC officials in recent weeks. While the April jobs report was “a touch softer”, Dudley remarked that it wouldn’t affect his economic outlook and that two rate hikes this year was a “reasonable expectation”.”