Traders Don't Expect Fed to Raise Interest Rate in 2011

Before you go, we thought you'd like these...

The Federal Reserve is unlikely to raise interest rates until mid-2012 in light of new unemployment figures, which signal a slow economic recovery, Reuters reported.

November's unemployment rate rose to 9.8% from 9.6% in October while the U.S. private sector added just 50,000 jobs -- about a third of what analysts had forecast -- the U.S. Labor Department announced Friday. Additionally, the underemployment rate, which includes both the unemployed and those working part time who are seeking full-time jobs, remained at a 17%, and the number of people out of work for at least six months increased to 6.3 million, the Labor Department said.

On the Chicago Board of Trade, short-term interest-rate futures traders aren't pricing in increases in the target interest rate for overnight lending between banks until May 2012, according to Reuters. Traders, who previously indicated that they thought the Federal government would curtail its plan to buy $600 billion in bonds to spur the economy, had been pricing in an interest-rate hike at about December 2011 before this latest jobs report.

Read Full Story

People are Reading