Fed Swaps Price In Peak Policy Rate of 5.5% in September

The market for wagers on the Federal Reserve’s policy rate are pricing in a higher peak of 5.5% in September after a gauge of prices received by US manufacturers in February increased more than estimated.

(Bloomberg) — The market for wagers on the Federal Reserve’s policy rate are pricing in a higher peak of 5.5% in September after a gauge of prices received by US manufacturers in February increased more than estimated. 

The rate on the September overnight index swap contract rose as high as 5.52%, nearly a percentage point above the current effective fed funds rate. 

The Fed has raised its policy rate eight times since March 2022, most recently to a range of 4.5%-4.75% on Feb. 1, after dropping the lower bound to 0% two years earlier at the onset of the pandemic.

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