Investing.com – Markets slashed the chances that the Federal Reserve (Fed) would hike rates at the next meeting in September and no longer expect an increase this year after the U.S. central bank chief Janet Yellen gave a speech at Jackson Hole Economic Symposium on Friday.
While Yellen appeared hawkish, indicating that “the case for an increase in the federal funds rate has strengthened in recent months,” she did admit that the Fed’s decision would always depend on the incoming data
Furthermore, Yellen mentioned that the Fed now expects inflation to rise to the 2% target “over the next few years”, perhaps suggesting that it could take some time before the U.S. central bank would need to move.
In any case, markets priced in a lower probability of a rate hike after Yellen’s remarks. At 15:13GMT, or 11:13AM ET, Fed fund futures priced in the possibility of a rate hike for the September meeting at 12%, compared to 21% prior to her speech and 27% the day before, according to Investing.com’s Fed Rate Monitor Tool.
Odds for November dropped to 17.5%, compared to 37.5% earlier.
Furthermore, markets took a move in December off the table on Friday with the chance dropping from 55.2% to 49%.
The probability of a rate hike now only passes the 50% for the February 2017 decision.
Stay up-to-date on market expectations for future Fed policy moves by visiting:
http://www.investing.com/central-banks/fed-rate-monitor