Federal Reserve’s main bond dealers banking on interest rate increase

There is uncommon dissent in the ranks of the Federal Reserve’s primary dealers over the US central bank’s interest-rate decision this week.

Two of the Fed’s 23 preferred bond-trading partners — Barclays and BNP Paribas — are betting against their peers and the bond market by forecasting officials will raise rates at the Fed’s latest policy meeting, which starts today.

It is the first time more than one dealer has gone against the consensus during the week of a policy meeting since last September. Economists at both banks say traders have too steeply discounted officials’ intent to hike after the Fed has remained on hold for longer than expected.