Futures traders see late 2014 Fed rate hike more likely

CHICAGO (Reuters) - Traders are now betting the U.S. Federal Reserve will begin raising interest rates in December 2014 -- a month earlier than they previously bet -- after the Fed on Wednesday did not ease policy in response to a weaker economy.

Futures contracts tied to the overnight lending rate between banks fell after the Fed's policy-setting committee described the economy as having "decelerated somewhat" and reiterated its disappointment with the high level of joblessness but kept its current policy on hold.

"The Committee will closely monitor incoming information on economic and financial developments and will provide additional accommodation as needed," the Fed said in its statement in a shift from its June meeting language.

Traders now see a 50 percent chance the U.S. central bank will begin raising interest rates in December 2014. Before the announcement, traders were betting on a January 2015 rate hike, and saw only a 42 percent chance of a rate hike the prior month.

(Reporting by Ann Saphir; Editing by James Dalgleish)

Source: http://news.yahoo.com/futures-traders-see-2014-fed-rate-hike-more-185648810--business.html

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