(Bloomberg) -- As the dusts settles in the aftermath of November’s inflation data, bond traders have cut wagers on Federal Reserve interest-rate hikes next year, leaning toward a quarter-point increase as early as February. 

While interest rate swaps all-but-confirm a 50 basis-point move at Wednesday’s decision, a dovish repricing has swept through the Fed-dated contracts. In total, an additional 84 basis points of hikes are now priced into the next two policy meetings — favoring 50 basis points, then a 25 basis-point move. 

In total, the swaps market is now pricing the Fed’s policy rate to peak at just 4.85% by May, down from almost 5% ahead of Tuesday’s inflation print. Beyond May, the swaps market is now pricing 50 basis points of rate cuts over the second half of next year. The current Fed policy range is now 3.75% to 4%. 

With the half-point move solidifying for Wednesday’s meeting, investors will be looking for clues from the Fed Chair Jerome Powell on the potential for further easing in the policy path. Powell has emphasized the central bank’s commitment to returning inflation to its goal and the uncertainty of the outlook. 

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