Federal Reserve Rate Futures Update

(Reuters) – Futures linked to the Federal Reserve's policy rate decreased slightly after it was reported that wholesale prices rose more than anticipated last month. However, this change did not significantly alter traders' confidence that the U.S. central bank will lower short-term borrowing costs again next month.

The recent data indicated that producer prices, excluding food and energy, increased by 3.1% over the 12 months up to October. Following this report, traders assessed the probability of a quarter-point interest rate cut in December at about 75%, down from over 80% prior to the release of the data. Additionally, there was a slight shift in expectations for rate cuts in the following year, with traders anticipating no more than two further quarter-point hikes for the entirety of 2025.