Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON
News: Latest News
Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance Pro.CalendarSectors 
All NewsEconomyCurrencies & ForexEconomic EventsCryptocurrenciesCybersecurityPress Releases

U.S. fed funds futures raise rate hike chances in early 2023 after Fed statement

06/16/2021 | 03:29pm EDT
FILE PHOTO: Federal Reserve Board building on Constitution Avenue is pictured in Washington

NEW YORK (Reuters) -Futures on the federal funds rate, which track short-term interest rate expectations, on Wednesday raised bets that the U.S. Federal Reserve will tighten monetary policy in early 2023 after Fed projections showed at least two rate increases that year.

The fed funds market showed a roughly 90% chance of a rate hike by January 2023. Prior to the Fed statement, the market fully priced in a rate increase by April 2023.

New projections saw 11 Fed officials, a majority, pencil in at least two quarter-point interest rate increases for 2023, even as officials in their statement pledged to keep policy supportive for now to encourage an ongoing jobs recovery.

"That's enough of a hawkish surprise for the bond market and it's getting all of the attention," said Frances Donald, global chief economist, Manulife Investment Management, in Toronto, reacting to the Fed's rate projections, or the so-called "dot plot."

"There has not been a material change of tone. This statement has only a few adjustments. The market is reacting to a few strands of information in the dot plot," said Donald.

In his press conference after the meeting, Fed chairman Jerome Powell said Fed projections do not represent a committee decision or plan.

For some context, on the "dot plot," DRW Trading market strategist Lou Brien said Powell is not a fan of the dots as a rate forecast, but has said that "they are useful in signaling Fed sentiment."

Brien noted, for instance, that the December 2018 dot plot showed a U.S. rate forecast to near 3% by end-2019 during the Fed's hiking cycle. But rates never ticked higher and stood at 1.75% at the end of 2019.

(Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Sinead Carew; Editing by Chizu Nomiyama and Nick Zieminski)

By Gertrude Chavez-Dreyfuss


ę Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
AUSTRALIAN DOLLAR / US DOLLAR (AUD/USD) 0.07% 0.74037 Delayed Quote.-4.33%
BRITISH POUND / US DOLLAR (GBP/USD) 0.07% 1.39257 Delayed Quote.1.58%
CANADIAN DOLLAR / US DOLLAR (CAD/USD) 0.10% 0.7981 Delayed Quote.1.86%
EURO / US DOLLAR (EUR/USD) 0.03% 1.18731 Delayed Quote.-2.79%
INDIAN RUPEE / US DOLLAR (INR/USD) 0.10% 0.013481 Delayed Quote.-1.77%
NEW ZEALAND DOLLAR / US DOLLAR (NZD/USD) 0.15% 0.70546 Delayed Quote.-2.69%
Latest news "Economy & Forex"
08/03Gold inches higher on lacklustre dollar ahead of U.S. jobs data
RE
08/03Singapore banks' quarterly results signal growth slowdown amid COVID impact
RE
08/03Hong kong's hang seng tech index rises more than 3%
RE
08/03India reports 42,625 new covid-19 cases in last 24 hours - govt statement
RE
08/03Indian fintech firm BharatPe valued at $2.85 billion after Tiger Global-led funding
RE
08/03London copper rises as dollar remains weak
RE
08/03INDIAN MORNING BRIEFING : Asian Markets Mostly Higher
DJ
08/03Boeing postpones Starliner launch after new glitch
RE
08/03KENNETH POSSENRIEDE : Lockheed Martin begins search for new CFO after Possenriede's exit
RE
08/03Japanese shares dip on Delta variant anxiety; earnings in focus
RE
Latest news "Economy & Forex"