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US rate futures rise on softer January inflation boosting June Fed cut bets
An eagle tops the U.S. Federal Reserve building's facade, as U.S. President Donald Trump said he was firing Federal Reserve Governor Lisa Cook over alleged improprieties in obtaining mortgage loans, in Washington, D.C., U.S., August 26, 2025. REUTERS/Brian Snyder
An eagle tops the U.S. Federal Reserve building's facade, as U.S. President Donald Trump said he was firing Federal Reserve Governor Lisa Cook over alleged improprieties in obtaining mortgage loans, in Washington, D.C., U.S., August 26, 2025. REUTERS/Brian Snyder
US rate futures rise on softer January inflation boosting June Fed cut bets
Summary:
- US interest rate futures raised odds of Fed rate cuts in June after softer inflation data.
- January Consumer Price Index rose 0.2%, below economists’ 0.3% forecast.
- Fed funds futures implied 64 basis points of easing after the inflation report.
NEW YORK, Feb 13 (Reuters) – U.S. interest rate futures on Friday raised odds of rate cuts by the Federal Reserve in June after a report that showed inflation rose less than expected in January.
Futures on the federal funds rate, which measure the cost of unsecured overnight loans between banks, priced in a nearly 70% chance that the Fed will resume cutting interest rates at the June meeting. That was 64% before the data’s release.
The U.S. central bank, however, is still expected to hold interest rates steady at the March meeting.
Fed funds futures also implied 64 basis points (bps) of easing by the central bank after the data, compared with 58 bps just before.
Data showed the Consumer Price Index (CPI) rose 0.2% last month after an unrevised 0.3% gain in December. Economists polled by Reuters had forecast the CPI increasing 0.3%.
Excluding the volatile food and energy components, the CPI increased 0.3% after rising by an unrevised 0.2% in December.
“As long as CPI remains in check – which so far it has – then the rates discussion will revert back to the labor market, and under the current economic conditions the Fed is likely to proceed cautiously lowering rates a couple of times later this year,” said Chris Zaccarelli, chief investment officer for Northlight Asset Management in Charlotte, North Carolina.
(Reporting by Gertrude Chavez-Dreyfuss)
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