KONTAN.CO.ID - NEW YORK. Traders of futures tied to the Federal Reserve's policy rate have stuck to their bets of a quarter percentage point interest rate hike next week as relative calm prevailed in global financial markets for a second day running and a U.S. inflation survey showed near-term expectations for price pressures dropping to their lowest level in almost two years. It caps a tumultuous week in which money market pricing experienced wild swings, with predictions of a 50 basis point move jettisoned after the collapse of two large regional U.S. banks prompted emergency action from the Fed and other regulators, and rates seen unchanged at one point, before traders by Thursday once again coalesced around a 25 basis point hike as fears of a new global banking crisis abated. Policymakers now have almost all relevant economic data in hand before they convene on March 21-22, a year into a the fastest tightening cycle since the early 1980s designed to quash high inflation. While a key inflation report and jobless claims report this week suggested inflationary pressures are far from vanquished, a separate survey on inflation expectations released on Friday offered more encouragement.
Traders Keep to Bets Fed Will Raise Interest Rates by 25 bps Next Week
KONTAN.CO.ID - NEW YORK. Traders of futures tied to the Federal Reserve's policy rate have stuck to their bets of a quarter percentage point interest rate hike next week as relative calm prevailed in global financial markets for a second day running and a U.S. inflation survey showed near-term expectations for price pressures dropping to their lowest level in almost two years. It caps a tumultuous week in which money market pricing experienced wild swings, with predictions of a 50 basis point move jettisoned after the collapse of two large regional U.S. banks prompted emergency action from the Fed and other regulators, and rates seen unchanged at one point, before traders by Thursday once again coalesced around a 25 basis point hike as fears of a new global banking crisis abated. Policymakers now have almost all relevant economic data in hand before they convene on March 21-22, a year into a the fastest tightening cycle since the early 1980s designed to quash high inflation. While a key inflation report and jobless claims report this week suggested inflationary pressures are far from vanquished, a separate survey on inflation expectations released on Friday offered more encouragement.