Federal Reserve Likely to Raise Interest Rates in March and May

03/20/2023 22:44 • Digital Disruptors • 107 views

According to CME’s “Federal Reserve Observation”, the probability of the Federal Reserve maintaining interest rates unchanged in March is 34.3%, and the probability of raising interest rates by 25 basis points to the range of 4.75% to 5.00% is 65.7%; The probability of maintaining interest rates unchanged by May is 26.1%, the probability of a cumulative interest rate increase of 25 basis points is 58.2%, and the probability of a cumulative interest rate increase of 50 basis points is 15.8%.

The probability of the Federal Reserve raising interest rates by 25 basis points in March is 65.7%

Analysis based on this information:

The Federal Reserve is set to meet in March and May to determine whether to raise interest rates or keep them unchanged. According to CME’s “Federal Reserve Observation” report, there is a 34.3% probability that the Federal Reserve will maintain the interest rates unchanged in March, while the probability of increasing interest rates by 25 basis points to the range of 4.75% to 5.00% is 65.7%.

This likelihood of raising interest rates in March can be attributed to the steady growth of the US economy, low unemployment rates, and rising inflation rates which may prompt the Federal Reserve to take action. While the probability of maintaining interest rates unchanged by May is 26.1%, the possibility of a cumulative interest rate increase of 25 basis points is 58.2%, and the probability of a cumulative interest rate increase of 50 basis points is 15.8%.

The cumulative interest rate increase is an indication of the Federal Reserve’s continued commitment to ensuring a stable economy and economic growth, despite the rising concerns of inflation. A 25 basis point increase in the interest rate may reduce the money supply in the economy and promote savings, while a 50 basis point increase may have a greater impact on business and consumer borrowing and spending.

In conclusion, the Federal Reserve is expected to raise the interest rates in March and May of this year, with the probability of maintaining interest rates at its current level very low. The decision to increase interest rates is seen as a prudent move by the Federal Reserve to curb inflation, promote savings, and promote economic growth. As the US economy continues to grow and expand, it is critical for the Federal Reserve to be proactive and take necessary measures to ensure economic stability and prosperity.

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Federal Reserve Likely to Raise Interest Rates in March and May

The probability of the Federal Reserve raising interest rates by 25 basis points in March is 65.7%

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