Fed not expected to raise interest rates in May
While traders’ expectations for an interest rate hike from the Fed are decreasing, their expectations for rate cuts from June are also getting stronger.
The change in forecasts was realized with the expectation that the priority of the Central Banks would be financial stability, not inflation, due to the concerns about the banking sector.
The expectation that the US Federal Reserve will not change the interest rate in May is priced in the swap markets. In June, the 25 basis point rate cut is priced at 100 percent. Until the end of the year, there is an expectation of a rate cut of more than 100 basis points in total.
In its meeting this week, the Fed increased the policy rate in the 9th month despite the banking crisis and increased it by 25 basis points to the range of 4.75-5 percent. The bank has signaled that the increases will continue.
The Fed did not change its interest rate expectation of 5.1 percent set in December for the end of 2023.