Traders of futures tied to the Federal Reserve's policy rate have priced in a 50-basis-point hike in interest rates at the US central bank's Mar 21-22 policy meeting after Fed Chair Jerome Powell said on Tuesday (Mar 7) that
The price of fed funds futures contracts fell, pointing to a 66 per cent probability that the central bank will lift its benchmark overnight interest rate to the 5.00-5.25 per cent range on Mar 22, from the current 4.50-4.75 per cent range, according to the CME Group's FedWatch tool. That was up from the 30 per cent chance seen before Powell's testimony before the Senate Banking Committee.
"A 50-bp hike in the next meeting is possible, but it is going to be dependent on the payrolls not slowing down and CPI numbers showing that the disinflation progress we've made is stalling," said Scott Ladner, chief investment officer at Horizon Investments. Powell's testimony on Tuesday marked a stark acknowledgement that a"disinflationary process" he spoke of repeatedly in a Feb 1 news conference may not be so smooth.
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