Investing.com - A rate cut at this week's Federal Reserve policy meeting is no longer a done deal, as surging energy prices, trade progress and upbeat retail data have all undercut the arguments for easier policy.
Expectations that the central bank will lower its benchmark overnight rate remain, but chances seem to be growing that this could be the last one, according to Investing.com’s Fed Rate Monitor Tool.
Traders priced in a 35.4% chance that the Fed will leave rates unchanged at a two-day meeting that concludes on Wednesday, while 64.6% believe rates will be lowered by 25 basis points. Last week, the implied probability of a cut had been 94.6%.
The shift in expectations has come as oil prices surged following attacks on Saudi Arabian oil installations at the weekend, and rising inflation numbers last week. Meanwhile, trade progress between the U.S. and China have also dampened rate cut expectations, as signs that both sides want to avoid further escalating the dispute reduce a key risk to the U.S. economic outlook.
