Storm Clouds Gather Over the Fed

The Federal Reserve’s plan for accelerating the pace of monetary policy-tightening might be running into some trouble.

Investors have unwound bets the Fed will pick up the pace of interest-rate increases over the past few days as political and financial turmoil rattles countries such as Italy, Turkey and Argentina.

The Fed has penciled in three rate increases for 2018, and investors still see a more than 70% chance of that happening. But they have grown increasingly skeptical the Fed will deliver a fourth increase this year. That is something investors and Fed officials had been warming up to recently amid evidence of stronger U.S. growth and inflation.

Markets are now pricing in just a 24% chance the Fed raises rates four or more times this year, according to CME Group data. That is down from over 50% last week.