US Federal Reserve could raise interest rates next month

The Federal Open Market Committee (FOMC) minutes suggest that the US central bank could raise interest rates next month if economic data points to stronger second-quarter growth.

Members of the Fed it would be appropriate to raise rates next month as long as labor market conditions continue to improve and inflation remains on-track to reaching the central bank’s 2 percent target rate.

In April the Fed voted 9-1 in favour of keeping rates unchanged, but noted that threats from the global economic slowdown had somewhat eased.

Interest rates have been kept between 0.25% and 0.5% since December.

The central bank remains wary of external factors, including the possibility of the UK voting to leave the European Union next month.

The Fed meets one week before Britain’s EU referendum, and some analysts believe that the central bank may avoid a rate hike next month to prevent further market destabilization.

Sal Guatieri, senior economist at BMO Capital Markets, was quoted by the BBC as saying: “A super-cautious [Fed Chair Janet] Yellen might well wait for more convincing evidence of a sustained pickup in the economy and a resolution of Brexit risks before pulling the trigger in July.”

Fed policymakers appear to be much more bullish than they did earlier this year and global markets are already responding to the heightened odds of a move taking place this summer.