(Updating prices; adding details, analyst opinion)
NEW YORK, March 17 (Reuters) – The eurodollar funding markets and Fed, which monitors short-term interest rate expectations, on Wednesday eased a bet on a possible tightening schedule by the Federal Reserve US after lowering expectations for early move. .
Trading has been very volatile following Fed Fed statement and Fed Chairman Jerome Powell’s press release, with futures prices fluctuating frequently, so betan rate hikes are moving as well.
In the more liquid eurodollar futures market, traders have found a price in 90% chance of a Fed hike by March 2023 following Fed report, pushing back from December 2022.
Traders were still seeing two more rate hikes in 2023, but the understandable results have come down slightly, suggesting a less strong condemnation, compared to that before the Fed meeting.
The feeder currency market, which has a thinner size, showed a chance of around 80% rate increase by February 2023, compared to what was expected to tighten by December 2022 before the Fed comments.
In a statement after the Fed kept interest rates stable, the U.S. central bank said it expects a rapid jump in economic growth and inflation this year as the COVID-19 crisis subsides, promising keep their target interest rate close to zero for years to come.
Powell also said it was too early to consider buying thinner assets, reaffirming his commitment to await “further progress” toward Fed goals.
“Overall, the message hit by the Fed today was sad and saw the central bank push back against market prices,” said Simon Harvey, senior FX market analyst at Monex Europe in London. .
“With little to measure the parameters of the new inflation framework, markets are going to take whatever information they receive, even if the forward-looking measures do not represent a sideways response action. outside the loop. ”(Reporting by Gertrude Chavez-Dreyfuss; edited by Jonathan Oatis)