(Reuters) – The market is pricing in the likelihood that the Federal Reserve will slow the pace of rate hikes in early 2023, before likely ending the monetary tightening cycle in March, rate futures showed on Tuesday. of interest after the publication of a sharper than expected deceleration in inflation in November.
Futures now price in that the Fed is more likely to raise rates by 25 basis points, not 50 basis points, at the February and March meetings.
The target for the federal funds rate would then be in the 4.75%-5% range, which is below some economists’ expectations given the still high inflation rate and the strength of the labor market. .
The consumer price index rose 7.1% year on year in November, the smallest increase since December 2021.
Investors now estimate that the Fed would cut rates by just over half a point by the end of 2023.
(Ann Saphir, French version Laetitia Volga, edited by Sophie Louet)
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