Traders Push Back Speculation Of A Fed Hike As Growth, Markets Sour

Written by John Kicklighter, Currency Analyst
(Wednesday, 02 July 2008 10:11:03 GMT)

The FOMC rate decision passed as expected with the policy group bringing the most aggressive interest rate easing cycle in decades to an end by leaving the benchmark rate unchanged at 2.00 percent. Adding a hawkish tinge to the event, the Fed further raised its concern about inflation pressures. However, market participants were still clearly disappointed by the outcome as expectations for a quarter point hike by September dropped from nearly 90 percent to 65 percent according to futures. Downgrades to the outlook for economic growth and the health of the financial markets no doubt contributed to the dampened speculation.