Yellen Postpones Rate Hike Probably Until September

In a speech yesterday, Janet Yellen, chairwoman of the Federal Reserve, indicated that it was likely the Fed would abandon its plans for an interest rate hike at the next meeting later this month in light of the disastrous employment numbers for May. Although she left open the possibility of a hike in July, that pretty much looks like just posturing. Tim Duy, the go-to guy on reading the Fed tea leaves believes that July is off the table and September is the earliest month in play right now. You really have to wonder about the Fed – the rate hike in December turned out to be incredibly ill-timed and now the June hike has been put on hold with more bad economic news.  You think that they might get the message that it might be worth holding off on raising rates until the economy really shows signs of overheating.  Of course, it might help if fiscal policy could pull some of its own weight but that’s not likely to happen in an election year or with a Republican Congress.