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)