The market is actively pricing in the possibility of two Federal Reserve rate hikes by the end of the year following the latest Fed decision. According to CME's "FedWatch," the probability of the Fed maintaining current interest rates through July has decreased to 64.0% from 91.0% prior to the decision. Meanwhile, the likelihood of a 25-basis-point hike has risen to 35.1% from 8.9%, and a 50-basis-point hike is now at 1%.
Looking towards December, the probability of rates remaining unchanged has dropped to 14.2% from 38.2%. The chances of a 25-basis-point increase stand at 36.4%, while a 50-basis-point hike has increased significantly to 33.8% from 16.2%. Additionally, the probability of a 75-basis-point hike has surged to 13.5% from 2.4%, and a 100-basis-point hike is now at 2.1%, up from 0.1%.
Market Prices in Two Potential Fed Rate Hikes by Year-End
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