No Rate Hike Likely Until December, Bloomberg TV's Riccadonna Says

As the Federal Reserve kicks off its two-day policy meetings today, Bloomberg TV's Carl Riccadonna discussed where he expects the board to lean on interest rates.
By Lindsay Rittenhouse ,

NEW YORK (TheStreet) -- As the Federal Reserve begins its two-day policy meetings today, Bloomberg TV's Carl Riccadonna estimated that the first interest rate increase will likely come after the November presidential election on "Bloomberg Go" Tuesday.

"No rate hike expected tomorrow but the market seems to steadily be repricing a rate hike sooner rather than later," Bloomberg's Alix Steel noted.

"I don't know that we can say sooner rather than later. I think that September is still going to be too much of a stretch here," Riccadonna said, referencing the "lingering" Brexit uncertainty surrounding both the domestic and international markets.

"So I think the Fed is going to be forced to be on hold until after the election in November, which then puts the first rate hike coming in December," he continued.

The Fed is making a "trade off" by waiting to raise rates, according to Riccadonna.

"They've always indicated they want to keep moving gradually toward tighter monetary policy now so they have to do less work later on but they're making a trade off holding off now and I think they'll move a little bit faster next year as a result," he explained.

For the Fed to make a move on interest rates, board members need to see growth above trend, "let's call that above 2%, they need to see employment rate holding in at a sub 5% level, and they need to see that wage inflation is providing a tailwind to consumer spending," Riccadonna stated.

"I don't think there's tremendous mystery as to what will push the Fed into action, we just need to see evidence of more vigorous growth," he commented.

The Dow Jones opened trading lower by 0.09% to $17.26, the S&P 500 is slipping by 0.3% to $6.55 and the NASDAQ is down by 0.05% to $2.53 this morning.

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