Economy

Fed Rate Cuts Bets Reduced Following Robust Jobs Data

Traders of futures contracts associated with the FED's policy rate reduced bets on Friday that the U.S. central bank would soon cut interest rates. This change in outlook followed the government's report that employers added more jobs than expected in April, and the unemployment rate decreased.

, and Uzay Erol

May 5, 2023 . 1:05 PM

1 min read

Fed's Benchmark Rate Hike and Extended Pause

On Wednesday, the Fed raised its benchmark rate for what it indicated could be the final time before taking an extended pause. This pause will allow the effects of the policy tightening to date to help reduce high inflation in the economy.

Traders' Delay Expectations for Policy Rate Easing

Before the positive jobs report, traders had anticipated the Fed would reverse course and begin easing the policy rate, currently within the 5.00%-5.25% range, by September. However, after the jobs data release, they predict any rate cuts will be postponed in the year.