FILE PHOTO: A cyclist passes the Federal Reserve building in Washington, DC, U.S., August 22, 2018. REUTERS/Chris Wattie/File Photo/File Photo(Reuters) - The Federal Reserve’s plans to continue raising interest rates next year were met with more skepticism on Wall Street on Monday, with futures traders betting on a pause and one major bank partially walking back a hawkish prediction.The U.S. central bank is still seen raising rates a notch next week in a nod to a hot labor market and economy running well above potential even as inflation remains at target. Yet two volatile months in financial markets and signs of an overseas slowdown have raised doubts the Fed can carry through with the three rate hikes its officials have predicted for 2019.The sharp tightening of financial conditions convinced Goldman Sachs’ chief economist that the U.S. central bank is now more likely to pause its rate hikes in March, before continuing with three more hikes later in 2019. Goldman had previously predicted four rate hikes next year, far more than that implied by financial markets.“We think the probability of a move in March has now fallen to slightly below 50 percent,” Goldman’s Jan Hatzius wrote in a note on Monday. Contracts expiring in June 2020 are now fetching a higher price than contracts expiring a year earlier, meaning traders are beginning to put some money on a rate cut.The changing predictions put a spotlight on the Fed’s own expectations, which it will update next Wednesday when it delivers its expected fourth rate hike of the year.

Source: Egypt Today December 11, 2018 10:07 UTC