Futures flat as investors prepare for rate hike

Twelve of the 23 dealers saw a rate increase to 1.00-1.25 percent by the June 13-14 meeting, while 10 expected such a move by the Fed's September meeting, the latest Reuters poll showed. If you have a credit card or savings account, want to buy a home or a vehicle, and invest in stocks or bonds, pay attention. It would be only the third increase since the Fed slashed rates to a record of almost zero in 2008 during the financial crisis.

But now, the economy is widely considered sturdy enough to handle modestly higher loan rates. If this proves correct and the growth rate of overall USA inflation falls, helped in part by the rising US dollar, there will be less urgency for the Fed to tighten monetary policy further. But that may not matter for the immediate market reaction, which will hinge on how the Fed sees the future, not the future itself. When you add in the amount of paperwork and other regulatory risks that banks incur, you have a situation where banks are struggling to make a profit. Now they could be a step closer to light at the end of that tunnel and earn a little more interest on savings account deposits.

FED MEETING: Most economists expect the Fed to raise interest rates by a quarter of a percentage point when the central bank finishes its meeting Wednesday.

CHECKING ITS OPTIONS: Pharmaceutical company Cempra rose 15 cents, or 4.2 percent, to $3.75 after it said it hired Morgan Stanley to help it figure out how to best use its cash.

To start seeing a real difference, it could take one to two years at least, experts say.

What is the Fed expected to do? The big questions that remain: Will raising rates really crash "the stock market that is so bloated" as Trump predicted in his very first speech as a candidate?

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Why will it raise rates?

"The tweaks mainly benefit the sellers' market, which means more sales, more supply and weaker prices".

The rate hike is a foregone conclusion (probably, maybe, possibly, who knows?).

Still, any indication the Fed might lift rates at a faster pace than the current three moves priced in for this year is likely to hit interest rate sensitive sectors such as utilities or listed property.

Bond prices tend to rise when interest rates rise. If you are looking to refinance, you should be able to find five-year fixed rates in the 2.69% to 2.84% range, depending on the terms and conditions that are important to you. The respondents even mentioned the risks in the future of U.S. economy even after the promises by Trump for delivering growth. In that context, they don't think unemployment can go much lower without inflation going higher. During the last economic expansion - 2001 to 2007 - mortgage rates hovered between 5% and 7%. Continued gains would encourage the Fed to continue to raise interest rates gradually, though a quick burst higher in inflation or another surprise could upset things.

Westpac's senior market strategist Imre Speizer said the likely hike suggested a belief that the downside risks of 2015, regarding global uncertainties and weak inflation, as well as those of early 2016, with wavering United States jobs growth, were in "the rear-vision mirror".

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