(Reuters) – Futures contracts that settle to the Federal Reserve’s policy rate on Wednesday reflected growing confidence that the U.S. central bank probably will not increase borrowing costs any further, even after the U.S. government reported August inflation accelerated.
After the report the contracts pared earlier losses, as traders priced in a receding likelihood that the Fed will raise the policy rate beyond the 5.25%-5.5% range set in July. The prices now imply about a 60% chance the Fed will keep rates to that range through year end, versus a closer-to-even chance before the report.
(Reporting by Ann Saphir)