Fed delays rate hike ahead of Brexit
The Fed might be forced to delay another rate lift during its June gathering due to mounting worries as for the economic fallout from the UK’s vote on whether this country should abandon the European Union.
The geopolitical risk will most probably push any rate lift until at least July, notwithstanding evident consensus among Fed representatives that a lift is warranted by stronger American growth as well as tight labor markets.
The Fed's rate-setting monetary policy gathering scheduled on June 14-15 comes just a week before the UK’s vote on June 23. The given leave vote is supposed to shock financial markets, causing credit spreads to widen, thus triggering an investable rush into safe assets and boosting the greenback.
The greenback’s recent stability appears to be another reason the major US bank has become more comfortable with surging rates, and its representative might want to let the threat of Brexit pass right before shifting to tighten financial conditions.
On Thursday, Daniel Tarullo, Fed Board Governor joined those warning of his sincere worries as for the UK’s vote, informing Bloomberg that Brexit would appear be a crucial factor to be considered during the Fed’s June gathering and the UK’s impact on markets would be decisive.