Federal Reserve building
Capital markets expect the Federal Reserve to raise the interest rates by 75 basis points (pbs) in June after the US central bank decided on April 4 to raise the interest rates by 50 bps – the most since May 2000.
Futures on the federal funds rate priced in a nearly 75% chance of a three quarters of a percentage point tightening by the Federal Reserve in June meeting.
This was despite Fed Chair Jerome Powell ruled out such a rate hike.
Rate futures also factored in more than 200 bps of cumulative hikes for 2022 and a year-end fed funds rate at 2.85%.
The CME's FedWatch tool also showed a large rate increase probability of 83%, or 75 bps.
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