May 13, 2020 / 1:11 PM / 16 days ago

Traders see Fed cutting rates to below zero next year

May 13 (Reuters) - The U.S. central bank will take the unprecedented step of pushing interest rates, now near zero, below that level by next year to cushion the world’s biggest economy from the impact of the coronavirus, traders of futures contracts tied to the Federal Reserve’s policy rate are now betting.

Traders added to those bets after Fed Chair Jerome Powell signaled the U.S. central bank could take additional measures to combat the virus, and now expect the Fed’s policy rate will go negative by early 2021, according to CME Group’s FedWatch, which translates fed funds futures pricing into traders’ monetary policy expectations. (Reporting by Ann Saphir Editing by Chizu Nomiyama)

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