The Fed and other Central Banks in the Week Ahead

The Fed’s hawkish turn was extended. It now seems clearer to more participants that to maximize the Fed’s flexibility later in the year, it will need to raise rates in March. With the Fed still buying bonds, albeit at a slower pace, the January 26 meeting is all but ruled out. The pricing of the Fed funds futures reflects more than a 95% chance of a hike at the mid-March meeting. The futures strip favors a hike each quarter. It has three hikes fully discounted and about an 80% chance of a fourth. This adjustment that arguably began in September rippled through the capital markets, sending interest rates higher and

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