The timing of the next Federal Reserve rate hike has been pushed forward as the US central bank’s plans were sidetracked by the dismal US nonfarm payrolls report from last Friday. Just 38,000 jobs were added to the US economy in May.
“New questions about the economic outlook have been raised by recent labor market data,” Fed Chair Janet Yellen said on Monday during a speech delivered at the World Affairs Council of Philadelphia.
The Labor Department’s monthly employment reports get extra attention from the central bank.
Yellen indicated that the Fed will not be raising short-term interest rates until new uncertainties about the economic outlook are resolved.
Ms. Yellen and other Fed officials still believe they will be gradually lifting rates because they expect the US economy to improve.
However, a rate increase at the Fed’s June 14-15 policy meeting is now effectively off the table.
An increase in July is possible but has become less likely, and a September move is possible if economic data show the economy is rebounding by then.
The Fed raised short-term rates by a quarter percentage point, to between 0.25% and 0.5%, in December.