Most likely timing for next rate hike by Fed is Sep, says Nomura

Moneycontrol BureauBrokerage house Nomura says Fed chairperson Janet Yellen’s speech has reduced the likelihood that the FOMC will raise interest rates over the summer. It now expects the next rate hike to most likely come through in September. “Following last week’s surprisingly downbeat employment report, Yellen stressed uncertainty regarding the economic outlook. We believe that the FOMC needs to be confident that the economy is growing faster than its potential before it takes the next step in raising short-term interest rates,” says the Nomura report.The number of jobs created in the US tumbled in May, with the economy adding just 38000 jobs against expectations of 162,000 jobs being added.This has raised question markets about the strength of the recovery in the US economy.“Yellen did not repeat her judgment from 10 days ago that an interest rate increase may be appropriate "in the coming months." We think the fact that she did not give any specific timeline on when to expect the next rate hike, combined with her focus on economic uncertainty, implies that the FOMC is unlikely to raise rates soon,” says the Nomura report.