Traders have begun to price in the possibility that the Federal Reserve might not even hike interest rates at all at its March meeting following a widely anticipated increase in February.
(Bloomberg) — Traders have begun to price in the possibility that the Federal Reserve might not even hike interest rates at all at its March meeting following a widely anticipated increase in February.
Front-end rates plunged after consumer-price index data showed inflation is slowing, giving the Fed scope to tighten less. Comments from official Patrick Harker also helped support the move.
In the wake of that release, swaps shifted to show less than 50 basis points of tightening priced in across the next two meetings.
With pricing on February contracts suggesting that a move of at least 25 is baked in for that meeting — along with a small chance of a 50 basis point move — that means the market’s implying a small chance of no move at all in March.
–With assistance from Elizabeth Stanton.
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