Bond traders now consider it likelier than not that the Federal Reserve will raise rates two more times this year, and no longer see much chance the central bank will pivot to lowering interest rates during 2023.
(Bloomberg) — Bond traders now consider it likelier than not that the Federal Reserve will raise rates two more times this year, and no longer see much chance the central bank will pivot to lowering interest rates during 2023.
Rates on swap contracts referencing future Fed policy meetings suggest the US central bank will raise its target range for the federal funds rate by a quarter percentage point by September, and an additional 15 basis points by year-end — indicating a more than 50% likelihood of another quarter-point hike.
The Fed left its policy rate unchanged at 5%-5.25% on June 14 after 10 consecutive increases, as most forecasters expected. However, revised quarterly forecasts for the economy and monetary policy showed officials expect to raise rates twice more by year-end.
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