Odds of December rate rise jump to 92%

Posted on November 14, 2016

Is it Donald Trump or the line-up of Federal Reserve speakers or both?

Federal fund futures — or the contracts that investors use to bet on interest rate movements — imply a 92 per cent chance of a rate rise next month, compared with 84 per cent on Friday.

The move comes as investors expect president elect Donald Trump to unleash stimulus that will drive economic growth and push inflation higher. Fed policymakers have previously stated that they were watching for “some further evidence of continued progress toward its objectives” — with one of those objectives being 2 per cent inflation.

The move also comes as more than a dozen Fed policymakers deliver remarks this week. The list includes Fed chair Janet Yellen’s testimony to the Joint Economic Committee. It also includes remarks from New York Fed president Bill Dudley, Boston Fed president Eric Rosengren, vice chairman Stanley Fischer, Kansas City Fed president Esther George — all members of the monetary policy setting Federal Open Market Committee.

The Fed last raised interest rates in December 2015 and is scheduled to begin its next two-day meeting on December 13.

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