US rate futures see slightly higher chance of Sept hike after Powell’s comments

NEW YORK, July 26 (Reuters) – US interest rate futures on Wednesday saw an increased probability of another interest rate increase by the Federal Reserve this year in September after Chair Jerome Powell said the Fed has not ruled out raising rates in consecutive meetings.

The Fed raised rates by 25 basis points (bps) on Wednesday, as was widely expected, citing still-elevated inflation. The rate hike, the Fed’s 11th in its last 12 meetings, set the benchmark overnight interest rate in the 5.25% to 5.50% range,

“It is certainly possible we would raise the funds rate at the September meeting if the data warranted, and I would also say it’s possible that we would choose to hold steady at that meeting” if that’s what the data called for, Powell said, after the Fed decision.

He noted the US central bank will be making decisions on monetary policy on a meeting-by-meeting basis.

In afternoon trading, the benchmark fed funds futures factored in a 22% chance of a hike in September, compared with 21% late on Tuesday, and just 13.7% a week ago, according to the CME’s FedWatch.

For the November policy meeting, rate futures traders have priced in a 32% chance of a 25-bps hike, down moderately from 34.1% late Tuesday.

(Reporting by Gertrude Chavez-Dreyfuss; editing by Jonathan Oatis)