2016.05.3003:00:00UTC+00Yellen Hints at Hiking Rates Soon; Next Hike expected in July

On Friday, US Fed chair Janet Yellen stated that raising the interest rate will be appropriate “probably in the coming months” if the labor market and economy continue to bolster. Yellen’s statements provide a further stimulus to expectations and the US Fed is close to tighten its policy after hiking first in December, noted Nordea Bank in a research report.

Yellen signalled that the central bank might take action in this summer and reiterated the comments of other Fed officials who mentioned that the Fed might hike twice or thrice in 2016, with the next hike during its next FOMC meeting in June. Fed funds futures indicate towards a probability of 30 percent to hike in June, while a 54 percent possibility of a rate rise in July.

However, the US Fed is unlikely to hike rates in June, according to Nordea Bank. There is a higher possibility of the central bank hiking post the Brexit vote in July. In all, Fed’s recent hawkish hints imply that it is expected to raise rates two times in 2016.