March 20 Traders of short-term U.S. interest
rates continue to see the Federal Reserve holding rates near
zero for another two 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
released its policy statement at the end of a two-day
policy-setting meeting in Washington. Some contracts maturing in
mid-2014 pared earlier losses, but there was little movement in
most contract maturities.
Before the Fed released its policy statement, futures prices
suggested traders saw the Fed first hiking rates in March 2015,
giving a 51 percent likelihood of rate rise then based on
contracts traded at CME Group Inc's Chicago Board of Trade.
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.