Following a week of data showing unexpectedly resurgent inflation, fed funds futures contracts now indicate the Federal Reserve will hike its target rate up by half a percentage point in the coming months.
While the effective fed funds rate is at 4.58 percent and the Fed says it is targeting a range of between 4.5 percent and 4.75 percent, prices of fed funds futures imply a 54 percent chance that the target will be a range of 5.25 percent and 5.5 percent after the June meeting of the Federal Open Market Committee.
This is a dramatic shift in the views of market participants from a month ago. Back in January, the fed funds futures market implied the Fed would pause after one or two more hikes. There was a 51 percent chance that the rate after the June meeting would be between 4.75 percent and five percent. The market implied a 34.2 percent chance of a target range of five percent to 5.25 percent.
There’s also a non-trivial chance that the Fed could adopt a 50 basis point rise at the March meeting, which be an acceleration of hiking after the series of 75 basis points through most of last year and 50 basis points in December was followed by 25 basis points in February. A basis point is one-hundredth of a percentage point, so a 50 basis point hike is one-half a percentage point. A month ago, the market-implied no chance at all of that sized hike at the March meeting.
The swings came after a week in which data indicated that the labor market was not cooling off and inflation picked up in January. Jobless claims
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Gold Price Forecast: XAU/USD rebound needs validation from Federal Reserve Minutes, United States dataGold price (XAU/USD) stays defensive around $1,842, after bouncing off multi-day-old horizontal support the previous day. In doing so, the yellow meta
Read more »
The curious history of the Federal Reserve's 2% inflation targeting, explained'You would think that ... maybe somewhere in the Bible, God says he wants 2% inflation,' Laurence Ball, professor of economics at Johns Hopkins University, quipped to CNBC.
Read more »
Bitcoin, Ethereum Technical Analysis: Bitcoin Hits $25,000, Following Moving Average 'Death' Cross – Market Updates Bitcoin NewsBitcoin was hovering close to $25,000 on Feb. 20, as cryptocurrency markets traded close to recent highs. Ethereum remains above $1,700.
Read more »
Saudi bourse falls on Fed worries; Qatar gainsSaudi Arabia's stock market closed lower on Sunday after U.S. economic data stoked fears the Federal Reserve will act more aggressively to curb inflation.
Read more »
Trying to make sense out of very low job ratesA few weeks ago, the chair of the Federal Reserve Bank, Jerome Powell, told us that he wants the labor market to slow down so he can more effectively fight inflation.
Read more »
Senators Sherrod Brown, J.D. Vance call on EPA to monitor East Palestine following train derailment“We are concerned that the burning of large volumes of vinyl chloride may have resulted in the formation of dioxins that may have been dispersed throughout the East Palestine community and potentially a much large area,” the senators wrote in the letter.
Read more »