U.S. rate futures traders see no Fed rate hike until mid-2015

Wed May 1, 2013 2:08pm EDT

May 1 (Reuters) - Traders of short-term U.S. interest rate futures continue to expect the Federal Reserve to continue to hold rates near zero for better than two more years, after the U.S. central bank promised to press on with its super-easy monetary policy.

Fed funds futures contracts barely budged after the Fed's policy-setting panel, ending a two-day meeting, reiterated its plan to continue buying assets until there is substantial improvement in the labor market outlook.

Before the Fed released its policy statement, futures prices suggested traders saw about even odds of the Fed first hiking rates in July 2015, based on contracts traded at CME Group Inc's Chicago Board of Trade. Traders gave a September 2015 rate hike a 55 percent chance.

The Fed has held its target rate for overnight lending between banks at near zero since December 2008 and says it plans to keep it there as long as the U.S. unemployment rate remains above 6.5 percent. Unemployment fell to 7.7 percent in February.

The Fed is also buying $85 billion in long-term securities to further boost growth and hiring.

Rate futures contracts rise when traders see a greater chance of a later Fed rate hike. Contracts maturing in 2014 and 2015 held on to earlier gains.

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