Investors have sharply raised their expectations that the Federal Reserve will on Wednesday deliver the biggest single interest rate hike in 28 years amid red-hot inflation and a turbulent selloff across world markets.
Just last week, markets gave an 8.2 percent probability that the Fed would raise the benchmark federal funds rate by three-quarters of a percentage point at its June meeting, with 91.8 percent predicting a half a percentage point boost, according to CME Group’s Fed Watch tool.
But the expectation landscape for the scale of the Fed’s rate move has dramatically shifted, spurred by a violent selloff in risk assets and a sharp rise in bond yields following last week’s consumer price inflation data that showed inflationary pressures accelerating….