Merchants increase bets on June begin to Fed fee cuts as Trump places on new tariffs

(Reuters) – Merchants boosted bets the Federal Reserve will begin slicing rates of interest in June and ship a complete of three quarter-point reductions to the coverage fee by October, as U.S. President Donald Trump introduced new tariffs on imports, which economists say may increase inflation however may additionally sluggish the economic system.

Brief-term interest-rate futures now mirror a couple of 70% likelihood of a Fed fee minimize when the U.S central financial institution meets in June, up from about 60% earlier than the tariffs have been introduced.

Earlier than the announcement the contracts confirmed merchants felt the Fed would ship a complete of three fee cuts by December.

(Reporting by Ann Saphir; Modifying by Chris Reese)