Fed may complete rate hike by March-source
2022.12.13 10:28
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Fed may complete rate hike by March-source
Budrigannews.com – Brokers helped wagers Tuesday that cooling expansion will permit the Central bank to keep on tightening its loan cost climbs into the following year and reasonable end them in Spring, after an administration report showed buyer costs last month rose at their slowest speed in almost a year.
The prices of Fed funds futures implied a better-than-even chance that the Fed will follow an anticipated half-point increase in interest rates at its policy-setting meeting this week with smaller 25-basis-point increases at its first two meetings in 2023, with a possibility that the final increase will occur in May rather than March.
Given persistently high inflation and a stronger-than-anticipated labor market, that would bring the policy rate to a range of 4.75 percent to 5 percent, which is lower than some economists and markets had anticipated.
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After a Labor Department report showed that consumer prices rose less than expected by 0.1% in November compared to the previous month, expectations changed. The decrease from the 0.4% pace in October suggests that the Fed’s most aggressive set of interest-rate hikes in 40 years may be beginning to ease demand and price pressures. The year-over-year increase in consumer prices was 7.1 percent, the lowest since December 2021.
With rate-futures contracts pricing in a decrease of slightly more than half a percentage point by the end of 2023, traders increased their bets following the report that the Fed would begin cutting rates in September. That would bring the policy rate back to the 4.25 percent to 4.5 percent range, which is where policymakers are expected to raise it at the end of their two-day meeting on Wednesday.
