CME Group FedWatch's December hike probability edged higher after FOMC minutes

CME Group FedWatch tool, which calculates unconditional probabilities of Federal Open Market Committee (FOMC) meeting outcomes to generate a binary probability tree, shows that the markets are pricing a 46.8% probability of a 25 bps rate hike in December, compared to 42% on Tuesday.

Although the minutes from the July (25th & 26th) Federal Reserve’s monetary policy meeting failed to show a clear view on the next rate hike, several policymakers argued that they would need to see more proof of inflation moving towards the Fed's 2% rate before deciding on the next rate hike. Other details of the statement revealed that the uncertainty surrounding the fiscal, healthcare, and trade policies was holding back business investments. Regarding the inflation expectations, members failed to reach a consensus as some of them argued that the expectations were well-anchored while others disagreed.

• FOMC Minutes: Policymakers agreed a fall in longer-term inflation expectations would be undesirable