Federal Reserve more confident of rate hike before year-end, Fed watcher says

The US central bank might raise interest rates again in coming months if the economic data Stateside 'held up', a widely-followed Fed watcher said.

Now that financial markets appeared to have stabilised in the wake of the UK's decision to exit the European Union and if the US economy showed signs of "picking-up", US rate-setters were looking more confidently toward an interest rate hike before the end of 2016, possibly as soon as September, the Wall Street Journal's Jon Hilsenrath and Michael S.Derby wrote.

"The message in their post-meeting policy statement could be that the economy is on a more solid footing than appeared to be the case when they last gathered in June, setting the stage for raising rates if the data hold up in the months ahead," they said.

Nonetheless, policy-makers at the Federal Reserve were "almost certain" to leave rates unchanged at their 26-27 July meeting.

Such an approach would be consistent with recent remarks from the likes of Atlanta Fed president Dennnis Lockhart or his peer at the Dallas Fed, Robert Kaplan, they argued, while admitting the potential existed for rifts to appear among the ranks of the Federal Open Market Committee on the appropriate course forward.

The eight-week stretch between the July meeting of the would provide rate-setters in Washington with time to analyse two more monthly reports on the state of the US jobs market, together with a slew of other reports, they said.

As of 14:27 BST the US dollar spot index was higher by 0.52% at 97.062 and the odds of a 25 basis point rate hike at December's FOMC were at 46.5% according to the CME's Fed Watch tool.