Fed officials in June wary of looming economic risks | Finance & Commerce

Historically when the Federal Reserve has begun raising interest rates, economic and employment growth has has been stronger.

While private economists had expected the Fed’s first rate hike to occur in September, the recent standoff on Greek debt and the sharp plunge in Chinese stock prices – which emerged after the Fed’s June gathering – have prompted many analysts to expect a delay until the end of the year.

“Many participants expressed concern that a failure of Greece and its official creditors to resolve their differences could result in disruptions in financial markets in the euro area, with possible spillover effects on the United States”, according to the Fed’s minutes of its two day meeting which started June 16.

It highlighted progress in various sectors including manufacturing and housing.

Notably, the unnamed officials cited a “firming of wage increases”, a development that they had not seen during the recovery.

He later told reporters there hadn’t been any economic data since that meeting that had changed his view that the Fed should raise rates by half a percentage point this year. “Nevertheless, we would acknowledge that the lack of any upward pressure in average hourly earnings growth in June’s employment report means that the first rate hike could yet be delayed”.

Srinivas Thiruvadanthai, director of research at the Jerome Levy Forecasting center, says the Fed may hold off on raising rates through all of 2015. ” “They want to wait and see how things develop”, said Sung Won Sohn, an economics professor at the * a href=”http://www.memphisdailynews.com/Search/Search.aspx?redir=1&fn=Martin&ln=School” class=”learn” rel=”.

Name SearchWatch Service’>Martin Smith School of Business at California State University, Channel Islands. “If you compared that to a stock market crash it goes probably back to the crash in the U.S.in 1929 that lead to the great depression”.

“The [Fed’s committee] recognizes Greece as a risk to the forecast, but ultimately they are thinking, ‘How does this affect the US economy?'” said Luke Tilley, chief economist, Wilmington Trust Investment Advisors.

Wall Street economists still believe the Fed intends to hike in September, but note that many things can happen in the next 10 weeks.

The Fed maintained its target of zero for short-term interest rates at the June meeting.

Fed policymakers were anxious last month about problems in Europe and emerging market economies such as China – and those situations have worsened.

Financial markets are awaiting a speech Yellen is scheduled to give Friday for an updated assessment on her views of the economy. A rate hike would be another shock to the system.