(Reuters) - U.S. short-term interest rate futures pared earlier gains as Federal Reserve Chair Janet Yellen, following the Fed’s decision to raise rates a second time this year on Wednesday, downplayed recent weakness in inflation and said she believes conditions for it to rise to the Fed’s 2-percent target are in place.
Traders now see March 2018 as the earliest meeting at which the U.S. central bank would next lift its target for overnight borrowing costs, giving it about a 52 percent chance, based on fed funds futures traded at CME Group. Before Yellen began speaking, they had seen June 2018 as the earliest meeting for a next rate hike.
Fed funds futures traders at CME Group had earlier stepped up bets against a third 2017 rate hike after a report showed weaker-than-expected inflation last month.
Reporting by Ann Saphir; editing by Diane Craft