July 3, 2014 / 12:48 PM / 3 years ago

Fed seen raising interest rates in June 2015

(Reuters) - U.S. short-term interest-rate futures contracts fell Thursday after a government report showed stronger-than-expected job growth in June, as traders boosted bets the Federal Reserve may raise rates sooner than previously thought.

U.S. Federal Reserve Chair Janet Yellen arrives for a news conference following two-day Federal Open Market Committee meeting at the Federal Reserve in Washington June 18, 2014. REUTERS/Jonathan Ernst

The contracts show markets are assigning a roughly 55 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 traders saw a 52 percent chance of a June 2015 rate hike.

Immediately after the report traders saw a 42 percent chance of a rate hike in April 2015, up from 38 percent before the report.

The Fed has targeted short-term rates of between zero and 0.25 percent since December 2008, and has promised to keep them there for a “considerable time” after it ends its bond-buying program. Its bond-buying program is on track to end this fall.

Reporting by Ann Saphir Editing by W Simon

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