“Strong economy”, aka inflation and new jobs based on gig economy and “pump-and-dump” tactics, pushes FED to that direction.
In the wake of a recent report revealing robust job growth in August, traders are increasingly betting on the Federal Reserve raising interest rates sooner and keeping them elevated for a longer duration. According to information by Reuters, the implied yields on contracts linked to Fed policy rates suggest a nearly 50% probability of a quarter-point rate hike to the 5.50%-5.75% range at the Fed’s December meeting, up from a 34% chance prior to the jobs report. Additionally, traders are reducing expectations for Fed rate cuts next year, with futures contracts now projecting a Fed policy rate of 4.69% by year-end, up from the previous estimate of 4.59%.
If potentially inflationary policies, such as more and more federal spending, persist, they can prompt the Fed to increase rates further.
