Baku. Yegana Lachinzade – APA-Economics. Traders abandoned the expectations of a potential reduction of the base interest rate by the US Federal Reserve (Fed) in the summer of 2016, as positive data on the US labor market was supported by the assumption of a further increase in the interest rate, APA-Economics reported.
According to the CME Group FedWatch tool, market participants see zero change of a rate hike by 25 basis points in July. However, the probability of a rate hike in September increased to 17.8% and by the end of 2016 to 33.5%.
Immediately after the announcement of the Brexit results, the probability of a Fed rate reduction in September increased by almost 20%.
Meanwhile, Goldman Sachs economists expect the Fed will tighten the monetary policy. They assess the probability of at least one rate hike by the end of 2016 about 67%.