Federal Reserve Interest Rate Hike Probabilities

02/24/2023 02:45 • Blockchain Briefs • 92 views

According to CME’s “Federal Reserve observation”, the probability of the Federal Reserve raising interest rates by 25 basis points to the range of 4.75% – 5.00% in March is 73.0%, and the probability of raising interest rates by 50 basis points to the range of 5.00% – 5.25% is 27.0%; By May, the probability of a cumulative interest rate increase of 25 basis points is 0%, the probability of a cumulative interest rate increase of 50 basis points is 70.3%, the probability of a cumulative interest rate increase of 75 basis points to 5.25% – 5.50% is 28.7%, and the probability of a cumulative interest rate increase of 100 basis points to 5.50% – 5.75% is 1.0%.

The probability of the Federal Reserve raising interest rate by 50BP in March is 27%

Analysis based on this information:

The Federal Reserve is closely watched by investors and analysts, as its monetary policy decisions can have significant effects on the economy. According to CME’s “Federal Reserve observation,” there are probabilities for interest rate hikes in the near future that investors should take into account.

For March, there is a 73.0% chance of the Federal Reserve raising interest rates by 25 basis points to the range of 4.75% – 5.00%, with a 27.0% probability for a more significant increase of 50 basis points to the range of 5.00% – 5.25%. This suggests the central bank may soon look to take more assertive action to control inflation and manage the economy.

Looking ahead to May, the CME report shows that the chances of a cumulative interest rate increase of 25 basis points is almost nonexistent at 0%, with a 70.3% probability of a more significant cumulative increase of 50 basis points. There is also a chance that the Federal Reserve could opt for a 75 basis point increase to reach the range of 5.25% – 5.50%, with a probability of 28.7%. Finally, the chances of a 100 basis point increase to reach the range of 5.50% – 5.75% are relatively low at just 1.0%.

Based on these probabilities, investors should expect that the Federal Reserve will continue its cautious approach to interest rate hikes but may not be shy about taking bolder action if necessary. This could have implications for sectors such as banking and housing, as higher interest rates can impact borrowing costs and discretionary income.

Overall, the CME report suggests that the Federal Reserve is likely to take more action to manage interest rates over the next few months, highlighting the importance of monitoring these developments for market participants.

In summary, the CME report on Federal Reserve interest rate hike probabilities shows that moderate interest rate hikes are likely in the near future with chances of more aggressive increases as well. The central bank is expected to take a cautious approach but remain ready to take bolder action if needed. Investors should pay attention to these developments as they could impact sectors such as banking and housing.

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