Fed officials see September rate hike if economic data hold firm

Federal Reserve officials are looking more confidently toward an interest-rate increase before the end of the year, possibly as soon as September, as financial markets have stabilized after Britain’s vote to leave the European Union and the economy shows signs of picking up.

Policy makers at the central bank are almost certain to leave rates unchanged when they meet July 26-27, according to their public comments and interviews with officials.

But the message in their postmeeting policy statement could be that the economy is on a more solid footing than it seemed to be when officials last gathered in June, setting the stage for raising interest rates if economic data hold up in the months ahead.

Such a message would get the attention of futures markets, which view the chances of the Fed making a move by September as low. In early June, traders on the Chicago Mercantile Exchange put a probability of greater than 60% on the bank raising short-term rates by at least a quarter percentage point as soon as September, according to the CME. But that chance dropped sharply after a weak May jobs report and the June 23 Brexit vote, standing at just 12% on Monday before rising to 18% on Tuesday.