Fed October rate hike expectations decline while December comes to the forefront
With messages from John Williams and weak data, the probability of the Fed raising interest rates in October has dropped to 20-25 percent, while this rate stands at around 85 percent for December.
Expectations that the United States Federal Reserve will make a new interest rate hike in October have retreated to the 20-25 percent band in line with statements by New York Fed President John Williams and weakening economic data.
October Expectations Weaken
New York Fed President John Williams's messages that there should be no rush for a new interest rate hike significantly pulled down expectations for the October meeting.
Tightening in the Bond Market
The rise in long-term Treasury bond yields increased borrowing costs, creating a similar tightening effect in the economy even if the Fed does not take a new step.
Disagreements Among Officials
While there are differing assessments among Fed members regarding the path monetary policy will follow, some officials argue that inflationary pressure may persist.
December Scenario Strengthens
Following weak employment and inflation data, markets expect interest rates to remain unchanged in October and a new hike to be made in December.