Though the Federal Reserve has hiked interest rates aggressively thus far, it is expected to raise its policy rate above 5% by next May after a report on Friday showed little sign of a cooling in the labor market.
Futures contracts tied to the Fed’s policy rate suggested a 70% chance of a slower pace of rate hikes when it meets Dec. 13-14, after the Labor Department reported that U.S. jobs they rose more than expected in November, in contrast to the Fed’s policy. rate hikes The last 4 meetings have raised interest rates by 75 basis points.
But traders are also betting that the Fed will continue to hike rates next year to slow down the economy and the demand for goods, services and labour.
Fed Chairman Jerome Powell said this week that the labor market was “too good” to ease price pressures.
According to futures prices and the CME Fedwatch tool, the Fed will raise the current policy rate range from 3.75-4% to 4.92% in March next year, and is likely to rise to the 5- 5.25% in May next year.
Before the employment report, the official rate is expected to peak in a range of 4.75% to 5%.
