Traders see rising chance Fed defers first rate cut beyond June

By Thomson Reuters Feb 16, 2024 | 7:49 AM

(Reuters) – Traders of futures contracts tied to the Federal Reserve policy rate pared┬ábets on Friday that the U.S central bank will start cutting interest rates in June after a government report showed wholesale prices rose more than expected in January.

Before the report, which showed the core measure of the producer price index shot up 0.5% from a month earlier, traders put about a 75% probability on the Fed’s first rate cut coming in June. After the report the probability of a June rate cut fell to just over 50%, based on the price of Fed funds futures contracts.

(Reporting by Ann Saphir; Editing by Alison Williams)