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Why June rate hike talk is being skewed by the hawks

The circuit of Federal Reserve speakers has made its message loud and clear: A June rate hike is on the table.

However, the speeches might not accurately represent the leanings of the Federal Open Market Committee.

In May, several Fed officials made the case for increasing rates next month. San Francisco Fed President John Williams told reporters that two to three rate hikes this year "definitely still makes sense." Robert Kaplan, Dallas Fed president, said that he expects a rate hike soon. Boston Fed chief Eric Rosengren told an audience in New Hampshire that the likelihood of future rate hikes is “higher than is currently priced into financial markets.” Meanwhile, William Dudley, New York Fed president, told reporters Thursday that "the market was not putting in a sufficient probability" of a June rate hike.

Don’t miss Yahoo Finance’s interview with San Francisco Fed President John Williams on Monday at 4PM on the Final Round.

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After the Fed released its April minutes this week, in which it was revealed that FOMC members were generally open to increasing rates in June, market expectations for a June rate hike jumped up to 30%. However, Torsten Slok, chief international economist at Deutsche Bank, questions whether market expectations are on point.

“Upcoming Fedspeak will be more important than usual in understanding where the committee is leaning,” said Slok in a note. “[B]ut remember that hawks have tended to give more speeches than doves so it will be interesting to hear if we get confirmation of the hawkish message from the more dovish members…”

Speeches by Fed officials this year have been dominated by hawks, who tend to lean in favor of tightening policy, and this has potentially skewed the markets' interpretation of the FOMC's leanings.

Fed officials will deliver 12 speeches between now and the June meeting. More than half of the speakers are considered to be policy hawks, while only one, Chicago Fed President Charles Evans speaking on June 3, is a noted dove. Federal Reserve Chair Janet Yellen will speak next Friday at Harvard University.

Fed officials: dovish to hawkish scale