Tallahassee Journal

Rate-hike talk to heat up as Fed meets

Rate-hike talk to heat up as Fed meets

The Federal Reserve’s two-day June policy meeting which kicks off Tuesday could shed light on whether the Fed will heed the warning of other global bankers to hold off on interest-rate hikes until 2016. This past week has been a whirlwind for the global interest-rate complex. Ten-year government bonds in both the U.S. and Germany spiked to their highest levels since last September on signs the global economy was finally gaining traction and continued debate on when and if the Fed will hike rates this year.Janet Yellen

Exacerbating the volatile week in the bond markets were warnings from both the International Monetary Fund and the World Bank directed at the Fed. The message: Don’t hike rates until next year because the global markets are not quite stable enough to withstand the expected volatility.

Adding to the confusion was word late Thursday that the IMF had suspended talks with debt-strapped Greece due to a lack of progress. That news, which again sparked fears of a Greek default and possible exit from the eurozone, caused investors to turn more risk-averse, prompting them to pile back into the haven of bonds and pushing yields back down a tad at week’s end.

When the Fed meeting ends Wednesday with its policy statement and chief Janet Yellen’s news conference, Wall Street should have a better idea if the Fed is taking the warnings of others into consideration with regards to its rate-hike timetable.