TRADERS slashed bets the Federal Reserve will deliver a third straight 75-basis-point interest rate increase in September after data released Wednesday showed U.S. inflation slowed last month.
Consumer prices didn’t rise at all in July compared with June, a U.S. Labor Department report showed, marking the slowest monthly inflation in more than two years as fuel prices dropped.
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Traders of futures tied to the Fed’s policy rate sent the contracts soaring. Prices after the report show traders now expect the Fed to raise rates by 50 basis points next month, not the 75 basis points priced in before the CPI report.
The Fed’s current policy rate target is now 2.25%-2.5%. – Reuters