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CD Rates

Tepid month of hiring leads to doubts about Fed interest rate hike

Posted on Tuesday, July 7, 2015 at 8:54:29 PM

While the June hiring summary came with some good signs, such as 223,000 jobs added through the month, it also came with some worse indicators that have tempered expectations for a Federal Reserve interest rate hike in September. 

There had been a common belief among experts that an interest rate hike would be coming before the end of the year, but June's job report may have thrown a wrench in those plans. Previously, strong hiring and increasing wages were pointed to by Fed officials such as Janet Yellen as a reason for raising the benchmark interest rate, The New York Times reported. But a significant number of people dropped out of the labor market in June, and wages remained relatively flat through the month.

This may come as good news for potential homebuyers seeking residential financing, though. Mortgage rates usually nip at the heels of the Fed's benchmark interest rate, and if the government were to raise the rate, interest on new home loans would likely follow. 

While some believe that a rate hike will remain on schedule, and occur in February, others are pushing the expected action from the Fed on rates as far back as December, according to The New York Times.