Futures support view of mid-2015 U.S. rate hike

NEW YORK, June 18 Wed Jun 18, 2014 2:49pm EDT

NEW YORK, June 18 (Reuters) - Some U.S. short-term interest rates futures slipped on Wednesday as the latest forecasts among Federal Reserve policymakers strengthened the view the central bank may increase rates in mid-2015.

Federal funds futures for June 2015 delivery briefly fell to a 2-1/2 month low of 99.625 before rebounding to 99.665, up 1 basis point from Tuesday's close.

The price move suggested traders had priced in a 61 percent chance the central bank would raise short-term rates from its zero to 0.25 percent target range at its policy meeting a year from now, according to CME Group's FedWatch, which calculates the traders' expectations on changes to Fed's policy rate.

The Fed released the median view of central bank officials on the fed funds rate at the end of 2015 was 1.125 percent, up from 1.000 percent based on their March forecasts.

Their median outlook for the fed funds rate at the end of 2016 was 2.50 percent, up from 2.25 percent in March.

However, their median longer-run view on the fed funds rate was downgraded to 3.75 percent from 4.00 percent in March. (Reporting by Richard Leong; Editing by Nick Zieminski)

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California state worker Albert Jagow (L) goes over his retirement options with Calpers Retirement Program Specialist JeanAnn Kirkpatrick at the Calpers regional office in Sacramento, California October 21, 2009. Calpers, the largest U.S. public pension fund, manages retirement benefits for more than 1.6 million people, with assets comparable in value to the entire GDP of Israel. The Calpers investment portfolio had a historic drop in value, going from a peak of $250 billion in the fall of 2007 to $167 billion in March 2009, a loss of about a third during that period. It is now around $200 billion. REUTERS/Max Whittaker   (UNITED STATES) - RTXPWOZ

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