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Futures traders bet Fed to hike rates as early as September 2014

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(Globalpost/GlobalPost)

SAN FRANCISCO (Reuters) - The Federal Reserve is likely to start raising short-term interest rates as soon as September 2014, months before most policymakers at the Fed itself expect to do so, based on trading in rate futures at CME Group Inc.

Contracts tied to the Fed's key short-term rate target fell on Friday after a U.S. government report showed the U.S. economy added 195,000 jobs in June, more than expected.

Before the report, traders had seen October 2014 as the first meeting where Fed policymakers were likely to begin raising a rate they have kept near zero since December 2008.

After the report, they were pricing in a 58 percent chance of a September 2014 rate hike, according to CME Group FedWatch, which uses fed funds futures prices to generate probabilities for rate hikes at future Fed meetings.

(Reporting by Ann Saphir; Editing by Chizu Nomiyama)

http://www.globalpost.com/dispatch/news/thomson-reuters/130705/futures-traders-bet-fed-hike-rates-early-september-2014