Traders Keep to Bets Fed Will Raise Interest Rates by 25 Bps This Week

Traders of futures tied to the Federal Reserve’s policy rate have stuck to their bets of a quarter percentage point interest rate hike this week.
It caps a tumultuous week in which money market pricing experienced wild swings, with predictions of a 50 basis point move jettisoned after the collapse of two large regional U.S. banks prompted emergency action from the Fed and other regulators, and rates seen unchanged at one point, before traders by Thursday once again coalesced around a 25 basis point hike as fears of a new global banking crisis abated.
A trader in the 10-year bond options pit of the Chicago Board of Trade signal orders as a television screen shows the Federal Reserve’s decision on short-term interest rates in Chicago on June 25, 2008. (Frank Polich/Reuters)
Policymakers now have almost all relevant economic data in hand before they convene on March 21–22, a year into a the fastest tightening cycle since the early 1980s designed to quash high inflation. While a key inflation report and jobless claims report last week suggested inflationary pressures are far from vanquished, a separate survey on inflation expectations released on Friday offered more encouragement….