Markets Expect Multiple Hikes from the Fed This Year

January 12, 2018
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The U.S. financial markets are pricing in two rate hikes from the Federal Reserve this year -- the probability of a hike in March went up to 84 percent, per Thomson Reuters.

Markets also put a 45 percent likelihood on a third rate hike in December, and a 13 percent chance of a fourth rate hike. CNBC says that importantly, the second rate hike is now priced with a 55 percent chance to happen in June; previously it had been priced in for August or September. 

Higher market expectations for rate hikes will put immediate pressure on new Fed Chairman Jerome Powell, who is expected to be confirmed this month by the Senate to succeed outgoing chair Janet Yellen. He has generally supported the existing outlook by the Fed for three rate hikes but if the stimulus from tax hikes boosts both growth and inflation, Powell could soon face a question of whether he needs to do more or do it faster.

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