The quickening US economic recovery has markets pricing in a Federal Reserve rate rise as soon as next year, but analysts warn this accelerated timetable is far too “aggressive”. Recent data pointing to a strong recovery in the labour market and leading indicators signalling rapid growth in both the services and factory sectors have prompted traders to sharpen their bets that the US central bank will lift interest rates from near-zero sooner than previously anticipated. Eurodollar futures, a closely tracked measure of interest rate expectations, now indicate the Fed will initiate lift-off by the end of 2022, with three additional interest rate increases pencilled in by early 2024.
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