Q1’s GDP Will Likely Delay Interest Rate Increase Beyond June

The Federal Reserve Bank in Washington DC

WASHINGTON, DC—The economic calendar was not kind to the Federal Reserve Bank’s Federal Open Market Committee this month.  The policy-making organization was scheduled to release its statement about its decision, or non-decision, on interest rates the day before the US Bureau of Economic Analysis was set to release its first pass at the first quarter’s gross domestic product.

To be sure, expectations were low for Q1’s economic output. But the Fed has been under pressure to come up with a set path to monetary policy to which it could stick. Hinting that it may notch up the federal funds rate in June, which it did in Wednesday statement, would not be a good move if the GDP figures, released on Thursday, were worse than expected. Which they were.