Expectations for an interest rate hike were pushed back after the Federal Reserve pointed to weakness in the U.S. labor market and economy, a sign rate hikes could be pushed back. Bobbi Rebell reports
The Federal Reserve out with a downbeat statement on the U.S. economy, acknowledging weakness in some sectors, such as jobs and housing, and making it more likely that it will not be ready to raise rates until at least September. In fact, based on CME FedWatch, traders are now betting December will likely mark the start of the rate hike cycle. The Fed also took out calendar references, and pointed to decisions being data dependent. American Bankers Association President Governor Frank Keating: SOUNDBITE: GOVERNOR FRANK KEATING, PRESIDENT, AMERICAN BANKERS ASSOCIATION (ENGLISH) SAYING: "No surprises really. The Fed, basically, said 'we are going to look at this again.' Data driven. 'We'll probably consider raising rates later.'" Earlier in the day, new data showed the economy slowed more sharply than expected in the first quarter. GDP up just 0.2 percent on an annual rate, the weakest in a year, and below Reuters forecasts. What's interesting is that, when the Fed acknowledged the slowing economic growth, it also pointed to, in part, transitory factors. Reuters' Jonathan Spicer: SOUNDBITE: JONATHAN SPICER, REUTERS CORRESPONDENT (ENGLISH) SAYING: "The Fed has stuck with its guns, that 'look, we don't see this as lasting.' Again, they still need to see proof that the economy is going to bounce back from the first quarter, but yet, you are right, they said transitory once, twice, three times in this statement, seemingly, trying to make crystal clear that they are sticking by their line that, yeah, the economy is going to, sort of, emerge from the winter and get better, and, hopefully, clear the way to a rate hike later this year." The central bank will have at least two months of economic data to consider before its next policy-setting meeting in June. That one will be followed by a Q&A session with reporters.