(Adds ECB decision, more details)
March 16 (Reuters) - The Federal Reserve is seen raising
interest rates by a quarter of a percentage point at its meeting
next week as the European Central Bank on Thursday delivered its
own aggressive rate hike and U.S. economic data came in stronger
than expected, outstripping lingering fears of a global banking
crisis.
Money market pricing has varied greatly this past week as
traders have digested a whirlwind of news, from the collapse of
two large regional U.S. banks to Swiss regulators having to
pledge assistance to Credit Suisse.
After the ECB's decision to go ahead with a 50 basis point
hike to tame too-hot inflation despite volatility in financial
markets, traders of U.S. rate futures firmed up their bets that
the U.S. central bank will raise interest rates by 25 basis
points next week.
The likelihood of a 25 basis point hike at the March 21-22
meeting was also bolstered on Thursday by an unexpected drop in
jobless claims, which pointed to continued labor market
strength, and stronger-than-expected housing data.
However, traders also continued to price in rate cuts
starting in the summer, with the Fed policy rate seen below 4%
by year end.
The U.S. central bank has raised its benchmark overnight
interest rate by 450 basis points since last March from
near-zero to the current 4.50%-4.75% range.
(Reporting by Ann Saphir and Lindsay Dunsmuir; Editing by
Andrea Ricci)
