Fed Swaps See About 80% Chance of a Quarter-Point May Rate Hike
- Shift in expectations comes on the heels of strong jobs report
- Officials are scheduled to meet on May 2-3 to decide on policy
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Traders raised the odds of another quarter-point rate increase by the Federal Reserve in May in the wake of strong employment data released Friday during a holiday-shortened session.
Swap contracts referencing Fed meeting dates repriced to levels indicating more than 80% odds of the US central bank raising its policy rate range to 5%-5.25% on May 3. The May contract’s rate increased to just over 5.03%, a level 20 basis points higher than the effective policy rate has been since the last increase.