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NEW YORK, Aug 1 (Reuters) - U.S. short-term interest rates futures were little changed on Wednesday as traders stuck to the view that the Federal Reserve would raise key borrowing costs two more times in 2018 with the next rate hike seen happening at its Sept. 25-26 policy meeting.
On Wednesday, Fed policymakers as expected left their target range on short-term rates unchanged at 1.75-2.00 percent even as they upgraded their view on the economy, following a two-day policy meeting.
Last week, the government said the economy grew at a 4.1 percent annualized rate in the second quarter, the fastest clip in nearly four years.
“They will definitely move in September and likely also in December barring a sharp drop off in growth,” said Kathy Jones, chief fixed income strategist at Schwab Center for Financial Research in New York.
There are doubts whether last quarter’s blistering growth pace is sustainable when the United States is sparring with China over trade. President Donald Trump has threatened to impose a 25 percent tariff on $200 billion worth of Chinese imports, while Beijing has said it would retaliate with similar measure.
Federal funds futures implied traders priced in about a 91 percent chance of a quarter-point increase to a target range of 2.00-2.25 percent next month, while they saw a 71 percent likelihood of a further quarter-point hike to 2.25-2.50 percent at the Fed’s Dec. 18-19 meeting, according to CME Group’s FedWatch program.
The U.S. central bank increased short-term interest rates in March and June. (Reporting by Richard Leong; Editing by Susan Thomas and Andrea Ricci)