strong inflation and jobs data are seen as justifying higher rates financial markets are convinced that the federal reserve will skip an interest rate hike and focus its attention on raising rates again in july but not all economists agree some are anticipating a 25basispoint hike in the feds policy interest rate next week which would bring the benchmark rate up to a range of 52555 and mark the 11th straight meeting with a hike the balance of the data still points to another hike said andrew hollenhorst chief us economist at citi in an interview with marketwatch he stressed repeatedly however that this forecast was a close call hollenhorst pointed to the strong 04 increase in the april reading of the core personal consumption expenditure price index which excludes food and energy prices added to a strong inflation reading the labor market also showed some strength adding 339000 jobs in may jonathan millar senior us economist at barclays agreed that there was real tension between the data weve gotten since the may meeting and the idea that the fed would be comfortable pausing millar said his baseline view is that the fed skips a rate rise next week but he added that he thinks the chances of a hike are very very high boy is it close for us millar said in an interview no matter what happens in june millar thinks the fed will eventually engineer two more 25basispoint hikes bringing the benchmark rate up to 55575 before it is finished fed officials will announce their decision at 2 pm eastern that will be followed by a press conference by fed chair jerome powell at 230 pm the sentiment that the fed would skip another rate rise in june arose after two officials fed gov philip jefferson and philadelphia fed president patrick harker mentioned the possibility in backtoback speeches on may 31 harker portrayed a skip in june as a return to a normal practice in which the fed does not make a move at every meeting jefferson meanwhile said a skip in june should not be interpreted to mean that the fed was done raising rates hollenhorst said the markets misinterpreted the fed guidance i think what the fed tried to do in this intermeeting period was not give us any guidance he said but he added that it is hard for markets that have been conditioned by a handholding fed clearly signaling its intentions after the release of consumer price inflation tuesday the market is now pricing in only about a slim chance of a rate hike next week both the bank of canada and australias central bank recently surprised traders by delivering hikes instead of holding steady luke tilley a former fed staffer who is now chief economist for wilmington trust investment advisors warned that stress in the banking sector could reemerge if the fed surprises the markets with another hike if they were to surprise the markets right now that would compound the regional banking stress and make the feds job much harder he said in an interview tilley said he thinks that the fed is done raising interest rates and that the central bank will cut rates before the end of the year inflation is going to be much lower the economy is going to be much slower and longterm inflation expectations are still very much in check tilley said hollenhorst noted that the market is forecasting a rate hike in july so a move in june would not be that big of a surprise to the market the yield on the 10year treasury note has risen to 379 from a low of 33 prior to the feds last meeting in may this content was created by marketwatch which is operated by dow jones  co marketwatch is published independently from dow jones newswires and the wall street journal