Market Sees Two Fed Hikes in 2018 for First Time in Nine Months

(Bloomberg) — On the eve of Janet Yellen’s second-last Federal Open Market Committee meeting as chair of the U.S. central bank, before handing over the reins to Jerome Powell, investors are showing the most confidence in nine months toward the prospect of higher interest rates next year.

The spread between January 2018 and January 2019 fed funds futures contract yields, a proxy for how many times rates will be raised next year, widened to half a percentage point on Tuesday for the first time since March, pricing two quarter-point increases. Back in September, investors weren’t even fully pricing a single hike.

Updated FOMC interest-rate projections to be released Wednesday will probably show the median participant on the 16-member committee still expects three quarter-point rate hikes next year, as in September. But there’s a chance that number could move up to four, depending on how optimistic policy makers are feeling about the outlook for economic growth and inflation.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.