Fed’s Fischer’s Comments Leads to Rate-Rise Odds Eased

Derivative markets show the Federal Reserve won’t raise its target interest rate until after September 2015 as comments from Vice Chairman Stanley Fischer indicated escalating concern about growth outside the U.S.

Rates on federal fund futures show the likelihood of a September rate increase fell to 46 percent, down from 56 percent on Oct. 10, and 67 percent two months ago, according to data compiled by Bloomberg. The chance of an increase in October is 56 percent. The implied yield on the December 2015 Eurodollar contract, the world’s most actively traded futures, traded at 0.82 percent, the lowest since May 2013 and down from 1.085 percent a month ago.

“If foreign growth is weaker than anticipated, the consequences for the U.S. economy could lead the Fed to remove accommodation more slowly than otherwise,” Fischer said in an Oct. 11 speech at the International Monetary Fund’s annual meetings in Washington.

Bloomberg