Traders trim expectation for next Fed rate hike to 75 basis points from 100 bps

Jul. 15, 2022 11:21 AM ETBy: Liz Kiesche, SA News Editor12 Comments

Rate Hikes

MCCAIG

  • After two Federal Reserve Bank officials pushed back against expectations that the central bank may hike its key interest rate by a full percentage point, traders have backed down and now expect a 75-bp rate increase at the end of July, according to the CME FedWatch tool.
  • The probability of a 100-bp hike has retreated to 28.5%; at one point on Thursday afternoon the probability for a full percentage point rate increase stood at 75.0%. At 11:10 AM ET Friday, the probability of a 75-bp rate hike stood at 71.5%.
  • A 75-bp hike at the July meeting would bring the federal funds rate target range to 2.25%-2.50% from its current level of 1.50%-1.75%.
  • On Friday, both Atlanta Fed President Raphael Bostic and St. Louis Fed President James Bullard said they supported a 75-bp increase at the July 26-27 meeting.
  • The blackout period for Fed officials speaking about the economy starts on Saturday and lifts on Friday, July 29.
  • Bullard's remarks on Friday echoed his views expressed in an interview with Nikkei on Thursday.

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