September 13, 2018 / 2:18 PM / 11 days ago

Traders still see more U.S. rate hikes as CPI disappoints

NEW YORK (Reuters) - U.S. short-term interest rates futures pared their earlier fall on Thursday as domestic consumer prices rose less than forecast in August, reducing traders’ view that inflation is accelerating but not their outlook for two more rate increases in 2018.

Federal funds futures implied traders still saw nearly a 100 percent chance that the Federal Reserve would raise key overnight borrowing costs to 2.00-2.25 percent at its Sept. 25-26 policy meeting, Reuters data showed.

The fed funds contracts suggested traders priced in about an 82 percent likelihood the U.S. central bank would increase short-term rates to 2.25-2.50 percent at its Dec. 18-19 policy meeting.

Reporting by Richard Leong

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