Date
6 December 2016
Traders work on the floor of the New York Stock Exchange. They put about a three-in-four chance the US central bank will increase the target range on their policy rates by a quarter point. Photo: Reuters
Traders work on the floor of the New York Stock Exchange. They put about a three-in-four chance the US central bank will increase the target range on their policy rates by a quarter point. Photo: Reuters

Traders see low probability of Fed rate hike this week

Traders are not expecting the Federal Reserve to raise interest rates at its policy meeting later this week amid mixed economic data and ahead of the US presidential election.

They put about a three-in-four chance the US central bank will increase the target range on their policy rates by a quarter point to 0.50-0.75 percent at its Dec. 13-14 meeting, Reuters reports, citing interest rate futures.

While the world’s biggest economy is hardly firing on all cylinders, US gross domestic product produced a stronger-than-expected 2.9 percent annualized growth rate in the third quarter, analysts said.

“Investment is still somewhat sluggish, consumption continues to grow solidly, and this adds up to GDP growth trending near 2 percent,” Credit Suisse chief economist James Sweeney wrote in a research note on Monday.

He said recent remarks from some Fed policymakers hinted a rate increase is likely in the near future.

Federal funds futures implied traders saw a 6 percent chance the Fed would raise rates at its two-day meeting that kicks off on Tuesday, compared with an 8 percent chance late on Friday, according to CME Group’s FedWatch program. 

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