WASHINGTON (MarketWatch) – The financial market is pricing in the probability of an interest-rate hike by the U.S. central bank in either March, May or June and that is “likely in the neighborhood of where we are heading,” said Dallas Fed President Rob Kaplan on Tuesday. “What market probabilities probably suggest is between now and June – in either the March, May or June meeting – you are going to see some action,” Kaplan said in an interview on CNBC. “I don’t think the exact timing is the most important thing. I think the path of rates is,” he said. The CME Group’s Fed funds futures pricing shows that traders see a 31% chance for a quarter-point rate hike in March. They bump those odds up to 54% for May and 73% for June. Kaplan, who is a rate-policy voter this year, said the economy is making good progress toward the Fed’s goals of full employment and a stable 2% rate of inflation. He said growth should be above 2% this year even before fiscal policies that could provide some upside. Given this outlook, “we should be taking steps to remove some amount of accommodation sooner rather than later,” he said.
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