Federal Reserve still on track for raised interest rates

Wall Street’s top banks are united in the belief the Federal Reserve will raise US interest rates when it meets next week, but recent choppy data on the American economy has created a division of opinion about what happens after that.

Latest US jobs figures, released at the end of last week, showed a severe pullback in hiring in May, but it also showed a drop in the country’s unemployment rate to a 16-year low together with a decent rise in wages. This was seen as enough for Fed policymakers to raise rates for the third time since last December as they seek to scale back monetary stimulus, according to the banks’ economists.

“The overall report shows a continued tightening in labour markets and should help solidify the Fed’s decision to hike rates in June,” said Mark Doms, senior economist at Nomura Securities International, one of 23 US primary dealers that do business directly with the Fed.