Analysts expect US interest rate hike again in June
June 1, 2006
The US dollar was a bit stronger on Thursday, but it had been stronger still before some data hinted that concerns about inflation were at least partly misplaced. The Institute of Supply Management’s May survey had US factory activity at 54.4, lower than the 55.5 reading that had been expected. In addition, unit labor costs for the first quarter came in at a 1.6 percent gain, year-on-year. This was lower than the 2.5 percent rise reported last month and lower than the gain of 1.9 percent that had been expected.
Still, with the release of the minutes from the US Federal Reserve meeting in May showing that the Open Market Committee had considered lifting interest rates by 50 basis points at that time, most analysts now expect another rate hike this month. US interest rate hikes have been coming in 25 basis point increments since the current cycle of increases began.
All this news combined to give the greenback a gain of 0.2 percent to $1.2821 versus the euro and sent it 0.3 percent higher in relation to the Japanese yen, to ¥112.43.