Why the Fed will wait on a rate rise

A modest pick-up in US inflation and improved labour market conditions will be welcomed by the Federal Reserve, but significant spare capacity across the economy will see rates on hold until next year.

A surprising pick-up in consumer prices suggests that improving labour market conditions may have finally created some modest inflationary pressures. But with significant spare capacity across the United States economy, the Federal Reserve won’t pull the trigger on interest rates until next year.


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