The odds that the Federal Reserve will raise rates in 2016 are diminishing rapidly in the aftermath of the Brexit vote, but stock market returns are unlikely to be affected.
An interest rate hike later this year, even at the December meeting after the outcome of the U.S. presidential elections, appears highly unlikely.
"The near-term effect of U.S. monetary policy is unlikely to be a catalyst for volatility," said Edison Byzyka, chief investment officer of Hefty Wealth Partners in Auburn, Ind.
The stock market rebounded quickly after the massive dips following the Brexit decision, reversing its losses. The impact of Brexit and the labor market reports during the past two months has demonstrated that an interest rate increase, even during the next 12 months is becoming improbable.
"We're at a point now where it really doesn't matter what Fed Chair Janet Yellen says, because the market is convinced that higher interest rates in the U.S. are a myth, at least for now," Byzyka said. "Federal funds futures are also pointing to a similar conclusion."
The market is now immune to a lack of interest rate hikes, said Patrick Morris, CEO of New York-based HAGIN Investment Management.
"It's the worst kept secret in awhile," he said. "We called this several days ago."
A temporary sell off of a few points could occur after future Fed meetings when an increase is not announced, but the market should end the year in positive single digit territory, said Jon Ulin, a managing principal of Ulin & Co. Wealth Management in Boca Raton, Fla.