Traders price about 50 per cent chance of October Fed rate hike
The odds mark a pullback from bets earlier this year that priced further tightening as almost certain.
Published
Traders are pricing about a 50 per cent chance that the Federal Reserve raises rates again in October.
The Fed lifted its benchmark rate by 25 basis points to a range of 3.75 per cent to 4 per cent, in a 12-0 vote. Traders had raised bets on two more rate rises this year, a bigger move than the Fed's own median projection of one further hike.
Fed governor Kevin Warsh has said too many inflation categories are still running above 3 per cent, keeping his focus on price stability rather than the labor market. Warsh has also said inflation remains too high even though the labor market is in good shape.
The dollar index rose 0.53 per cent to 100.19 after the Fed's decision, its highest level since 31 July. Dollar/yen rose 0.51 per cent to 155.88 over the same period.
The 50 per cent figure is a marked pullback from the roughly 95 per cent probability priced before the Fed's latest move, meaning markets now see additional tightening as far less certain. That shift comes even as officials including Warsh continue to stress that inflation remains too high, leaving traders testing whether the tightening cycle is nearing its end.