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Fed rate hike expectations soften as three reports point to slower growth

Market expectations have fallen since late July, when investors were looking for 1.8 hikes, with a roughly 90% probability now seen for just one move before year end.

Reported · Written up by our desk · Economy

ETF Trends says a rate hike this year, once viewed as close to certain, is looking less likely as three recent economic reports raise concerns that the economy may not be growing fast enough to warrant higher interest rates.

The outlet points to moderating inflation, citing core CPI inflation, and argues the data collectively suggest consumer demand and spending may not be robust enough to make inflation a persistent problem that the Fed must quickly address.

ETF Trends also notes that the long-term economic outlook remains strong, pointing to rising yields on the 30-year Treasury, and says the shift has led markets to reduce their expected number of Fed actions for the rest of the year.

In particular, the outlet says back in late July investors were pricing in about 1.8 rate hikes by year end, while it now estimates about a 90% probability of just one Fed hike before the new year.

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