CPI and PPI both came in above expectations last week, but the market's probability bet on a Fed rate hike in October fell rather than rose. CME Group's FedWatch tool weekend data showed the probability priced for a rate hike at the October 28 policy meeting at 15.5%, below 28.2% late last Thursday and 17.7% a week earlier. A rate hike within the year remains the mainstream bet: the probability of a rate hike at the December 9 meeting was set at 89%, of which 75.5% for 25 basis points and 13.5% for 50 basis points. Officials' expectations likewise released hawkish signals: the September meeting showed 16 of 19 FOMC officials expect at least one rate hike in October or December. Fed Chair Warsh said in Bangkok last week that inflation remains hot, but did not hint at action in October.
Market expects Fed to hold steady in October, December rate hike probability reaches 89%
Washington