At midday on the US stock market on Wednesday (13th), the exchange contract rate linked to the date of the July Federal Reserve (Fed) meeting rose as high as 2.477%, regarding 89.7 basis points higher than the current 1.58% federal funds rate. Traders showing swapped contracts are betting on a more than 50 percent chance of a four-yard (100 basis point) rate hike from the Fed at its July 26-27 monetary policy meeting.
Since then, with the exchange contract interest rate rising further, the exchange contract market expects the Fed to raise interest rates by 4 yards in July. The probability rose to nearly 75%.
On the other hand, the CME FedWatch tool shows that the current US federal funds rate futures trading market expects a 3-yard rate hike (75 basis points) at the July meeting to raise the target range of the federal funds rate to 2.25 to 2.5% The probability of raising interest rates by 4 yards and the benchmark interest rate target range rising to 2.50% to 2.75% is as high as 75%, and the probability of raising interest rates by 4 yards was estimated to be less than 8% a day ago. If July does raise interest rates by 4 yards, it will be the highest rate hike in Fed history.
The US consumer price index released on Wednesday rose 9.1% year-on-year, higher than market expectations of 8.8%, and continued to hit a 40-year high. After the data was released, some outsiders believed that the Fed may have to raise interest rates faster in the face of rising inflation instead of slowing down, and this inflation rate has also prompted traders to bet on the rate hike the Fed needs. The strength is over 3 yards in June.
Nomura Securities became the first Wall Street investment bank to predict that the Fed may raise interest rates by 4 yards. Nomura economists commented following the release of the CPI data that an interest rate hike of 4 yards is almost possible, and such a rate hike is the most appropriate from the perspective of forecasting or monetary policy optimization. choose.
JPMorgan economist Michael Feroli predicts that if the Fed does raise interest rates by 4 yards in July and 3 yards in September, the growth outlook for the economy might deteriorate later this year. Currently Feroli is inclined to believe that the main impact of the CPI data may allow the Fed to accelerate and raise interest rates aggressively.
On the same day, following the CPI data was released, Raphael Bostic, president of the Federal Reserve Bank of Atlanta, said that inflation in June was worrisome, saying “anything is possible.”
