Fed may edge closer to rate hike

The Fed could sound slightly more upbeat about the economy after its meeting Wednesday, and that could be enough to reinforce Wall Street's growing view that a rate hike is coming in December.

What the market is hoping to hear in the Fed's post-meeting statement Wednesday is how it now views Brexit and its impact on the world economy. The U.K. economy has already shown some signs of strain following the June 23 vote to exit the European Union, but U.S. data has only gotten stronger.

That's important since Fed officials cited Brexit as one of the reasons why they did not hike interest rates in June, along with the surprising weakness in May's jobs report. The jobs market has since bounced back with June's 287,000 nonfarm payrolls.

There is no expectation for a rate hike Wednesday, but the market odds for a September rate hike have risen to nearly 30 percent on a spate of recent data. That includes Tuesday's new home sales for June, which grew at the best pace since early 2008.
This follows a string of better than expected indicators, such as retail sales for June and the employment report and that has been signaling the Fed could move to hike rates this year after all.

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