Mortgage

March interest rate hike? Odds are now up to 50%

Chances up significantly from last week

The chances of a rate hike in March just went up, now standing at over 50% according to traders.

The Federal Reserve will end its two-day meeting on March 15 with the announcement of whether or not it will raise interest rates. While Bloomberg’s world interest rate probability tool showed a 34% chance of a March rate hike last week, that chance jumped to 52%, according to an article by Rob Kaplan for MarketWatch.

From the article:

The Fed has typically been viewed as reluctant to raise interest rates unless market-based expectations rise above a 50% threshold.

The rise in the probability of a rate hike came after Dallas Fed President Rob Kaplan told reporters that a tightening might come in the near future.

“There is the perception that Yellen's Fed is worried most about surprising the markets, so in some ways, this becomes a self-fulfilling prophecy,” Brent Nyitray, iServe Residential Lending Director of Capital Markets, said in a note to clients. “The more the Fed Funds futures price in a hike, the more likely the Fed is to vote for one.”

However, not everyone thinks the Fed will be raising interest rates several times this year. Jason Obradovich, New American Funding executive vice president of capital markets, explained in a previous interview with HousingWire that, for all its intentions, the Fed probably won’t be raising rates as much as it would like in 2017.

“The Fed has been trying to raise rates for several years in a row and they’ve only done it one time per year, and in December of all months,” Obradovich said. “They literally waited until the very last moment of each year to raise rates.”

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