On May 24, US economist Anna Wong said that the minutes of the May Fed meeting may show that concerns about credit conditions prompted most Fed officials to signal an imminent pause in raising interest rates.
But there may be relative reluctance from some concerned that inflation is falling too slowly. Differing views on the economy suggest that the consensus on the sidelines may be fragile.
We expect the Fed to keep rates on hold at its June meeting, with a baseline expectation that a last-minute debt-ceiling deal will exacerbate financial volatility and weigh on the economic outlook.
There is a good chance that the Fed will suspend operations for a long time after that. If the debt ceiling impasse is successfully resolved, then a 25 basis point rate hike in June will become one of the possible options.