Investing.com – The odds for rate hike by the Federal Reserve (Fed) in December passed the historically significant 70% threshold on Tuesday, suggesting that market expectations have reached a level of acceptance for the U.S. central bank to return to policy normalization at the end of the year.
According to Investing.com's Fed Rate Monitor Tool, odds rose to 70.2% on Tuesday, having hovered at just below that threshold a day earlier.
In the run-up to the last policy-decision meeting, many pundits explained that the Fed was unlikely to raise interest rates due to the historic fact that, in the last 25 years, the probability had been at or above this level in 90% of the cases wherein the Fed tightened policy.
Though the Fed has a policy meeting scheduled in early November most economists believe officials would avoid a rate hike that month, in part because the meeting falls just days before the U.S. presidential election.
Odds have been moving higher recently on the back of a string of positive economic data and particularly hawkish comments from several members of the Fed, above and beyond the three that dissented at the September meeting due to their preference for a 25 basis point hike.
Though several policymakers have insisted that the November meeting would be “live”, Fed fund futures priced in odds of only 10.3% for a move.
Amid a string of scheduled appearances by members of the monetary authority, market participants will pay particular attention to a speech by Fed chair Janet Yellen on "macroeconomic research after the crisis" at the Federal Reserve Bank of Boston’s Annual Research Conference at 1:30PM ET (17:30GMT) on Friday.
Stay up-to-date on market expectations for future Fed policy moves by visiting:
http://www.investing.com/central-banks/fed-rate-monitor