Traders now see 31% chance of fed funds rate at 5.25%-5.5% by March, plus slim chances it could head even higher

Fed-funds futures traders are boosting their expectations of how high the Federal Reserve could take interest rates next year, a day after Fed Chairman Jerome Powell indicated that rate hikes could go further than previously expected. As of Thursday morning, traders saw an almost 31% chance that the fed-funds rate target could climb to between 5.25% and 5.5%, up from 16.6% on Wednesday. In addition, they are pricing in a 12.4% chance that it could go to 5.5% and 5.75% by May, up from 4.7% a day ago. And for the first time, traders see a very slim, less-than-1% chance that the fed-funds rate might drift even higher to between 5.75% and 6% by June or the second half of next year.

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