15 Dec 2015
Federal funds futures imply a 83% chance of interest rate hike
FXStreet (Mumbai) - A day before the Fed decision on the interest rates, the Federal funds futures contracts imply a 83% chance that the Fed will end seven years of near-zero interest rates.
Its key policy rate has been 0-0.25% since the depths of the financial crisis in late 2008, and there are about even odds of a second rate rise by March. It is widely expected that the Fed would move rates by 25bps, which means the new policy rate would 0.25%-0.50%. However, a significant minority also believes the hike would be less than 25 bps to 0.25%-0.37.5%.
The monthly CPI figure due for release in a couple of minutes may not have a major impact on the rate hike probability unless the number is surprisingly strong or horribly weak.
Its key policy rate has been 0-0.25% since the depths of the financial crisis in late 2008, and there are about even odds of a second rate rise by March. It is widely expected that the Fed would move rates by 25bps, which means the new policy rate would 0.25%-0.50%. However, a significant minority also believes the hike would be less than 25 bps to 0.25%-0.37.5%.
The monthly CPI figure due for release in a couple of minutes may not have a major impact on the rate hike probability unless the number is surprisingly strong or horribly weak.