FED Poised for Biggest Hike in 28 Years

Investors have sharply raised their expectations that the Federal Reserve will on Wednesday deliver the biggest single interest rate hike in 28 years amid red-hot inflation and a turbulent selloff across world markets.Just last week, markets gave an 8.2 percent probability that the Fed would raise the benchmark federal funds rate by three-quarters of a percentage point at its June meeting, with 91.8 percent predicting a half a percentage point boost, according to CME Group’s Fed Watch tool.
But the expectation landscape for the scale of the Fed’s rate move has dramatically shifted, spurred by a violent selloff in risk assets and a sharp rise in bond yields following last week’s consumer price inflation data that showed inflationary pressures accelerating.
Investor bets as reflected in the Fed Watch tool are now showing zero probability for a 50 basis point hike and a whopping 95.6 percent probability of a 75 basis point increase when Fed Chair Jerome Powell announces the central bank’s rate decision later on Wednesday.
A rate hike of 0 …

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