Markets See Highest Chance Yet of Two More Fed Hikes in 2018

Federal Reserve officials expect to lift the central bank’s benchmark interest rate a total of four times in 2018, based on their economic projections. Markets are increasingly becoming believers.

Policy makers have already lifted borrowing costs twice this year, and their projections indicate another two quarter-point moves by the end of 2018. The implied yield on January fed funds futures, an indication of where the market sees the benchmark at year end, on Tuesday climbed to an unprecedented 2.36 percent, indicating around 44 basis points of additional tightening by the end of December. The first 25 basis points of this is priced as a near certainty for the Federal Open Market Committee’s meeting later this month, based on the October fed funds contract.