March 7, 2014 / 1:43 PM / 6 years ago

Fed seen as raising rates a bit earlier after jobs report

A general view of the U.S. Federal Reserve building as the morning sky breaks over Washington, July 31, 2013. REUTERS/Jonathan Ernst

(Reuters) - U.S. short-term interest-rate futures contracts fell after a U.S. government report showed U.S. employers added more jobs than expected in February, prompting some traders to price in an earlier date for a rate hike from the Federal Reserve.

The contracts show markets are now assigning a roughly 53 percent chance of a first Fed rate hike in June 2015, based on CME FedWatch, which tracks rate hike expectations using its Fed funds futures contracts.

Before the report, the earliest meeting seen as having a better-than-even chance of a rate hike was July 2015.

The Fed has targeted short-term rates of between zero and 0.25 percent since December 2008, and has promised to keep them there until well past the time the U.S. unemployment rate falls to 6.5 percent.

The unemployment rate rose in February to 6.7 percent, but job gains were 175,000, beating expectations.

Reporting by Ann Saphir; Editing by Chizu Nomiyama

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