September or Not, Market Says Fed's One-and-Done Until Late 2016
- Swaps show even Bill Gross overestimates central-bank plans
- Federal fund rate climb projected to follow gradual path
Fed Rate Hike: A Change of Plans?
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Bill Gross says if the Federal Reserve raises interest rates in September, policy makers are increasingly likely to wait at least six months before a second hike. Market measures indicate the wait may be twice that long.
Money market derivatives indicate the federal funds rate will average 0.59 percent one year from now. The rate would have to exceed about 0.625 percent to indicate two quarter-point increases, assuming the funds rate will trade close to the middle of the official band. The Fed has held its target for the rate in a zero-to 0.25 percent range since December 2008.