Fed Funds futures reflect increased chance of rate hike

06/05/06 - Barrington Research

NEW YORK, June 5 (newratings.com) - Analyst Alexander P Paris of Barrington Research says that the Fed Funds futures market is pricing in a 72% chance of an interest rate hike on June 29.

In a research note published this morning, the analyst mentions that data released by the US last week was broadly disappointing, signaling decelerating growth from the pace witnessed in 1Q. The May FOMC meeting indicated accelerated inflation expectations, with the committee citing an increase in energy and commodity prices and the depreciation of the US dollar, the analyst says. Following the release of the FOMC meeting minutes, the Fed Funds futures market priced in a 72% probability on a rate hike on June 29, up from the earlier 56%, Barrington Research adds.