Prime Rate

also known as the Fed, National or United States Prime Rate,
from the interest-rate specialists at www.FedPrimeRate.comSM

Monday, March 27, 2017

Odds At 95.7% (Very Likely) The U.S. Prime Rate Will Continue At 4.00% After The May 3, 2017 Monetary Policy Meeting

Prime Rate Forecast
Prime Rate Forecast
Latest Prime Rate Forecast

As of right now, the investors who trade in fed fund futures have odds at 95.7% (as implied by current pricing on contracts) that the Federal Open Market Committee (FOMC) will vote to leave the target range for the benchmark fed funds rate at 0.75% - 1.00% at the Wednesday, May 3RD, 2017 monetary policy meeting (very likely.)

The current Prime Rate, which went into effect on March 16, 2017, is 4.00%.

NB: U.S. Prime Rate = (The Fed Funds Target Rate + 3)

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At the end of last week, we learned that Federal Reserve Banks earned $92,000,000,000 during 2016, with $91,500,000,000 (99.46%) going to the United States Treasury Department.  Here's a clip:

"...The Federal Reserve Banks' 2016 earnings were approximately $92 billion. The Reserve Banks provided for remittances to the U.S. Treasury of $91.5 billion in 2016. Interest income on securities acquired through open market operations totaled $111.1 billion, a decrease of $2.5 billion from the previous year and attributable to changes in the composition of securities held in the Federal Reserve System Open Market Account (SOMA). Interest expense on depository institutions' reserve balances and term deposits during the year was $12 billion, an increase of $5.1 billion. Interest expense on securities sold under agreements to repurchase was $1.1 billion, an increase of $874 million from the previous year. Reserve Bank operating expenses were $6.7 billion, including assessments of $2 billion for Board expenses, currency costs, and the operations of the Bureau of Consumer Financial Protection..."

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Recent economic data influencing the latest odds include readings on inflation, jobs, manufacturing, housing, energy and business optimism.

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Current Odds

  • Current odds the U.S. Prime Rate will continue at 4.00% after the May 3RD, 2017 FOMC monetary policy meeting: 95.7%  (very likely), with remaining odds --  4.3% (very unlikely) -- that the U.S. Prime Rate will rise to 4.25%.

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  • Current odds the U.S. Prime Rate will continue at 4.00% after the June 14TH, 2017 FOMC monetary policy meeting: 51.5%  (on the fence), with remaining odds --  48.5% (on the fence) -- that the U.S. Prime Rate will be at least 25 basis points (0.25 percentage point) higher.


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  • Current odds the U.S. Prime Rate will continue at 4.00% after the July 26TH, 2017 FOMC monetary policy meeting: 43.9%  (on the fence), with remaining odds --  56.1% (on the fence) -- that the U.S. Prime Rate will be at least 25 basis points (0.25 percentage point) higher.

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  • Current odds the U.S. Prime Rate will continue at 4.00% after the September 20TH, 2017 FOMC monetary policy meeting: 29.5%  (not likely), with remaining odds --  70.5% (somewhat likely) -- that the U.S. Prime Rate will be at least 25 basis points (0.25 percentage point) higher.

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The odds associated with fed fund futures contracts -- widely accepted as the best predictor of what the FOMC will do with the benchmark Fed Funds Target Rate -- are constantly changing, so stay tuned for the latest odds.

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Wednesday, March 15, 2017

United States Prime Rate Rises to 4%

U.S. Prime Rate Is Now 4.00%
The Federal Open Market Committee (FOMC) of the Federal Reserve has just adjourned its eighth and final monetary policy meeting of 2016 and, in accordance with our latest forecast, has voted to raise the benchmark target range for the federal funds rate from 0.5% - 0.75% to 0.75% - 1.00%.  Therefore, the United States Prime Rate (a.k.a the Fed or national Prime Rate) is 4.00%, effective tomorrow.

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American banks have already started to announce that their Prime Lending Rate is now 4.00%, including:


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Here's a clip from today's FOMC press release (note text in bold):

"...Information received since the Federal Open Market Committee met in February indicates that the labor market has continued to strengthen and that economic activity has continued to expand at a moderate pace. Job gains remained solid and the unemployment rate was little changed in recent months. Household spending has continued to rise moderately while business fixed investment appears to have firmed somewhat. Inflation has increased in recent quarters, moving close to the Committee's 2 percent longer-run objective; excluding energy and food prices, inflation was little changed and continued to run somewhat below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, labor market conditions will strengthen somewhat further, and inflation will stabilize around 2 percent over the medium term. Near-term risks to the economic outlook appear roughly balanced. The Committee continues to closely monitor inflation indicators and global economic and financial developments.

In view of realized and expected labor market conditions and inflation, the Committee decided to raise the target range for the federal funds rate to 3/4 to 1 percent. The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a sustained return to 2 percent inflation.

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. The Committee will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.

The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction, and it anticipates doing so until normalization of the level of the federal funds rate is well under way. This policy, by keeping the Committee's holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.

Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; Charles L. Evans; Stanley Fischer; Patrick Harker; Robert S. Kaplan; Jerome H. Powell; and Daniel K. Tarullo. Voting against the action was Neel Kashkari, who preferred at this meeting to maintain the existing target range for the federal funds rate..."
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Friday, March 10, 2017

Odds At 93% (Very Likely) The U.S. Prime Rate Will Rise To 4.00% After The March 15, 2017 Monetary Policy Meeting

Prime Rate Forecast
Prime Rate Forecast
Latest Prime Rate Forecast

As of right now, the investors who trade in fed fund futures have odds at 93% (as implied by current pricing on contracts) that the Federal Open Market Committee (FOMC) will vote to raise the target range for the benchmark fed funds rate by 25 basis points (0.25 percentage point) to 0.75% - 1.00% at the Wednesday, March 15TH, 2017 monetary policy meeting (very likely.)

The current Prime Rate, which went into effect on December 15, 2016, is 3.75%A 25 basis point increase on March 15TH, 2017 would cause the U.S. Prime Rate to rise to 4.00%.

NB: U.S. Prime Rate = (The Fed Funds Target Rate + 3)

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From today's February jobs report:

  • At 235,000, nonfarm job gains were better than a popular consensus forecast.
  • The headline (U-3) unemployment rate held steady at 4.7%, while the U-6 jobless rate declined from 9.4% to 9.2%.
  • The civilian labor force participation rate rose from 62.9% to 63.0%.

At 2.8%, the update on year-on-year wage gains was not high enough for economists to get excited about a healthy inflation trajectory, but it was strong enough to virtually guarantee a rate increase on Wednesday.

On the month, private, nonfarm payrolls rose by $0.06 cents to $26.09 (+0.2305%), while average hourly earnings of private-sector production and nonsupervisory employees rose by $0.04 cents to $21.86 (+0.1833%.)

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Recent economic data influencing the latest odds include readings on nonfarm productivity, inflation, jobs, manufacturing and the services sector.

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Current Odds

  • Current odds the U.S. Prime Rate will rise to 4.00% after the March 15TH, 2017 FOMC monetary policy meeting: 93.0%  (very likely), with remaining odds --  7% (not likely) -- that the U.S. Prime Rate will remain at the current 3.75%.

    ==========

The odds associated with fed fund futures contracts -- widely accepted as the best predictor of what the FOMC will do with the benchmark Fed Funds Target Rate -- are constantly changing, so stay tuned for the latest odds.

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Friday, March 03, 2017

Odds At 79.7% (Likely) The U.S. Prime Rate Will Rise To 4.00% After The March 15, 2017 Monetary Policy Meeting

Prime Rate Forecast
Prime Rate Forecast
Latest Prime Rate Forecast

As of right now, the investors who trade in fed fund futures have odds at 79.7% (as implied by current pricing on contracts) that the Federal Open Market Committee (FOMC) will vote to raise the target range for the benchmark fed funds rate by 25 basis points (0.25 percentage point) to 0.75% - 1.00% at the March 15TH, 2017 monetary policy meeting (likely.)

The current Prime Rate, which went into effect on December 15, 2016, is 3.75%A 25 basis point increase on March 15TH, 2017 would cause the U.S. Prime Rate to rise to 4.00%.

NB: U.S. Prime Rate = (The Fed Funds Target Rate + 3)

=======================

Earlier today, Fed Chair Janet Yellen let the world know what the Fed intends to do, in a refreshingly clear speech.  Here's the key snippet:

"...In short, we currently judge that it will be appropriate to gradually increase the federal funds rate if the economic data continue to come in about as we expect. Indeed, at our meeting later this month, the Committee will evaluate whether employment and inflation are continuing to evolve in line with our expectations, in which case a further adjustment of the federal funds rate would likely be appropriate..."
Stay tuned for the latest odds.  Odds may experience a significant shift on Friday, March 10, 2017, when the Labor Department releases its February employment-situation report.  A weak reading on wages could prompt the FOMC to hold off on a rate increase.

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Recent economic data influencing the latest odds include readings on GDP, inflation, retail sales, jobs, consumer confidence, new home sales, existing home sales, housing starts, manufacturing, the services sector, and industrial production.

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Current Odds

  • Current odds the U.S. Prime Rate will rise to 4.00% after the March 15TH, 2017 FOMC monetary policy meeting: 79.7%  (likely), with remaining odds --  20.3% -- that the U.S. Prime Rate will remain at the current 3.75%.

    ==========

The odds associated with fed fund futures contracts -- widely accepted as the best predictor of what the FOMC will do with the benchmark Fed Funds Target Rate -- are constantly changing, so stay tuned for the latest odds.

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Friday, February 03, 2017

Odds At 91.1% (Likely) The U.S. Prime Rate Will Remain At 3.75% After The March 15, 2017 Monetary Policy Meeting

Prime Rate Forecast
Prime Rate Forecast
Latest Prime Rate Forecast

As of right now, the investors who trade in fed fund futures have odds at 91.1% (as implied by current pricing on contracts) that the Federal Open Market Committee (FOMC) will vote leave the target range for the benchmark fed funds rate at 0.5% - 0.75% at the March 15TH, 2017 monetary policy meeting (likely.)

The current Prime Rate, which went into effect on December 15, 2016, is 3.75%.

NB: U.S. Prime Rate = (The Fed Funds Target Rate + 3)

=======================

From today's January jobs report:

  • At 227,000, nonfarm payrolls advanced faster than expected.
  • At 2,242,000, the 2016, yearly job gains were better than the Labor Department's original reading.
  • The civilian labor force participation rate rose from 62.7% to 62.9%.
But, countering the positive:

  • The U-3 (headline) unemployment rate edged up from 4.7 to 4.8%, while the U-6 jobless rate rose from 9.2% to 9.4%.
  • For January, and significantly, average hourly earnings for all nonfarm, private employees rose by a disappointing 0.1155%, while the year-on-year hourly figure declined from 2.9% to 2.5%.

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With some influence on the latest odds: January experienced a very modest retreat for the services sector.

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Stay tuned for the latest odds...

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Current Odds

  • Current odds the U.S. Prime Rate will remain at the current 3.75% after the March 15TH, 2017 FOMC monetary policy meeting: 91.1%  (likely), with remaining odds --  8.9% -- that short-term rates will be at least 25 basis points (0.25 percentage point) higher.

     ==========
  • Current odds the U.S. Prime Rate will remain at the current 3.75% after the May 3RD, 2017 FOMC monetary policy meeting: 69.7%  with remaining odds --  30.3% -- that short-term rates will be at least 25 basis points (0.25 percentage point) higher.

     ==========
  • Current odds the U.S. Prime Rate will remain at the current 3.75% after the June 14TH, 2017 FOMC monetary policy meeting: 34.3%  with remaining odds --  65.7% (somewhat likely) -- that short-term rates will be at least 25 basis points (0.25 percentage point) higher.


    ==========

The odds associated with fed fund futures contracts -- widely accepted as the best predictor of what the FOMC will do with the benchmark Fed Funds Target Rate -- are constantly changing, so stay tuned for the latest odds.

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Wednesday, February 01, 2017

First FOMC Meeting of 2017 Adjourned: U.S. Prime Rate Holds At 3.75%

United States Prime Rate remains at 3.75%
Prime Rate
The Federal Open Market Committee (FOMC) of the Federal Reserve has just adjourned its first monetary policy meeting of 2017 and, in accordance with our most recent forecast, has voted to leave the benchmark target range for the federal funds rate at 0.50% - 0.75%. Therefore, the United States Prime Rate (a.k.a the Fed Prime Rate) will continue at the current 3.75%, which went into effect on December 15, 2016.

NB: U.S. Prime Rate = (The Fed Funds Target Rate + 3)

Here's a clip from today's FOMC press release (note text in bold):

"...Information received since the Federal Open Market Committee met in December indicates that the labor market has continued to strengthen and that economic activity has continued to expand at a moderate pace. Job gains remained solid and the unemployment rate stayed near its recent low. Household spending has continued to rise moderately while business fixed investment has remained soft. Measures of consumer and business sentiment have improved of late. Inflation increased in recent quarters but is still below the Committee's 2 percent longer-run objective. Market-based measures of inflation compensation remain low; most survey-based measures of longer-term inflation expectations are little changed, on balance.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, labor market conditions will strengthen somewhat further, and inflation will rise to 2 percent over the medium term. Near-term risks to the economic outlook appear roughly balanced. The Committee continues to closely monitor inflation indicators and global economic and financial developments.

In view of realized and expected labor market conditions and inflation, the Committee decided to maintain the target range for the federal funds rate at 1/2 to 3/4 percent. The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a return to 2 percent inflation.

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. In light of the current shortfall of inflation from 2 percent, the Committee will carefully monitor actual and expected progress toward its inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.

The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction, and it anticipates doing so until normalization of the level of the federal funds rate is well under way. This policy, by keeping the Committee's holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.

Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; Charles L. Evans; Stanley Fischer; Patrick Harker; Robert S. Kaplan; Neel Kashkari; Jerome H. Powell; and Daniel K. Tarullo..."

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Tuesday, January 31, 2017

Odds At 96% (Extremely Likely) The U.S. Prime Rate Will Remain At 3.75% After Tomorrow's Monetary Policy Meeting

Prime Rate Forecast
Prime Rate Forecast
Latest Prime Rate Forecast

As of right now, the investors who trade in fed fund futures have odds at 96% (as implied by current pricing on contracts) that the Federal Open Market Committee (FOMC) will vote leave the target range for the benchmark fed funds rate at 0.5% - 0.75% at tomorrow's monetary policy meeting (extremely likely.)

The current Prime Rate, which went into effect on December 15, 2016, is 3.75%.

NB: U.S. Prime Rate = (The Fed Funds Target Rate + 3)

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Looks like Wall Street's honeymoon with Donald Trump may be over, as waning technology stocks and various earnings misses conspired to clip the Dow Jones Industrial Average (DJIA), which closed at 19,864.09 today, 1.178% lower than its record-high close of 20,100.91, set on January 26, 2017.

The S + P 500 Index finished the day at 2,278.87, a 0.848% retreat from its record-high close of 2,298.37, set on January 25, 2017.


Let's hope our new president gets the message, and backs off from obviously overzealous attacks on legal immigration.

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Influencing the latest odds include readings on GDP, small-business optimism, inflation, retail sales, jobs, wages, consumer confidence, consumer sentiment, new home sales, existing home sales, housing starts, manufacturing, the services sector, and industrial production.

Stay tuned for tomorrow's FOMC decision on short-term rates...

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Current Odds

  • Current odds the U.S. Prime Rate will remain at the current 3.75% after tomorrow's monetary policy meeting: 96% (extremely likely), with remaining odds -- 4% (extremely unlikely) -- that the FOMC will opt to raise short-term rates by 25 basis points (0.25 percentage point.)

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  • Current odds the U.S. Prime Rate will remain at the current 3.75% after the March 15TH, 2017 FOMC monetary policy meeting: 79%  (somewhat likely), with remaining odds --  21% -- that short-term rates will be at least 25 basis points (0.25 percentage point) higher.

     ==========
  • Current odds the U.S. Prime Rate will remain at the current 3.75% after the May 3RD, 2017 FOMC monetary policy meeting: 62.1%  with remaining odds --  37.9% -- that short-term rates will be at least 25 basis points (0.25 percentage point) higher.


    ========== 

The odds associated with fed fund futures contracts -- widely accepted as the best predictor of what the FOMC will do with the benchmark Fed Funds Target Rate -- are constantly changing, so stay tuned for the latest odds.


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Thursday, December 15, 2016

Odds At 96% (Extremely Likely) The U.S. Prime Rate Will Remain At 3.75% After The February 1, 2017 FOMC Monetary Policy Meeting

Prime Rate Forecast
Prime Rate Forecast
Latest Prime Rate Forecast

As of right now, the investors who trade in fed fund futures have odds at 96% (as implied by current pricing on contracts) that the Federal Open Market Committee (FOMC) will vote leave the target range for the benchmark fed funds rate at 0.5% - 0.75% at the February 1ST, 2017 monetary policy meeting (extremely likely.)

The current Prime Rate, which went into effect on December 15, 2016, is 3.75%.

NB: U.S. Prime Rate = (The Fed Funds Target Rate + 3)

=======================


The Trump Effect still has capital moving out of the safety of American government debt, which is driving up yields.  The yield on the Ten-Year U.S. Treasury Note continues to surge higher, which, in turn, will cause mortgage rates to rise.

Here's a recent history on the ten-year yield:

  • December 7, 2016: 2.34%
  • December 8, 2016: 2.40%
  • December 9, 2016: 2.47% 
  • December 12, 2016: 2.49% 
  • December 13, 2016: 2.48% 
  • December 14, 2016: 2.54%
  • December 15, 2016: 2.60%

Let's hope all the Wall Street enthusiasm about Mr. Trump's rise to the White House is well placed.

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Influencing the latest odds include readings on Inflation, Retail Sales, Jobs and Industrial Production.

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Current Odds

  • Current odds the U.S. Prime Rate will remain at the current 3.75% after the February 1ST, 2017 FOMC monetary policy meeting: 96% (extremely likely), with remaining odds -- 4% (extremely unlikely) -- that the FOMC will opt to raise short-term rates by 25 basis points (0.25 percentage point.)

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  • Current odds the U.S. Prime Rate will remain at the current 3.75% after the March 15TH, 2017 FOMC monetary policy meeting: 74.7%  (somewhat likely), with remaining odds --  25.3% -- that short-term rates will be at least 25 basis points (0.25 percentage point) higher.

     ==========
  • Current odds the U.S. Prime Rate will remain at the current 3.75% after the May 3RD, 2017 FOMC monetary policy meeting: 60.4%  with remaining odds --  39.6% -- that short-term rates will be at least 25 basis points (0.25 percentage point) higher.


    ========== 

The odds associated with fed fund futures contracts -- widely accepted as the best predictor of what the FOMC will do with the benchmark Fed Funds Target Rate -- are constantly changing, so stay tuned for the latest odds.

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Wednesday, December 14, 2016

United States Prime Rate Rises to 3.75%

U.S. Prime Rate Is Now 3.75%
The Federal Open Market Committee (FOMC) of the Federal Reserve has just adjourned its eighth and final monetary policy meeting of 2016 and, in accordance with our latest forecast, has voted to raise the benchmark target range for the federal funds rate from 0% - 0.25% to 0.5% - 0.75%.  Therefore, the United States Prime Rate (a.k.a the Fed or national Prime Rate) is 3.75%, effective tomorrow.

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American banks have already started to announce that their Prime Lending Rate is now 3.75%, including:

============

Here's a clip from today's FOMC press release (note text in bold):

"...Information received since the Federal Open Market Committee met in November indicates that the labor market has continued to strengthen and that economic activity has been expanding at a moderate pace since mid-year. Job gains have been solid in recent months and the unemployment rate has declined. Household spending has been rising moderately but business fixed investment has remained soft. Inflation has increased since earlier this year but is still below the Committee's 2 percent longer-run objective, partly reflecting earlier declines in energy prices and in prices of non-energy imports. Market-based measures of inflation compensation have moved up considerably but still are low; most survey-based measures of longer-term inflation expectations are little changed, on balance, in recent months.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market conditions will strengthen somewhat further. Inflation is expected to rise to 2 percent over the medium term as the transitory effects of past declines in energy and import prices dissipate and the labor market strengthens further. Near-term risks to the economic outlook appear roughly balanced. The Committee continues to closely monitor inflation indicators and global economic and financial developments.

In view of realized and expected labor market conditions and inflation, the Committee decided to raise the target range for the federal funds rate to 1/2 to 3/4 percent. The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a return to 2 percent inflation.

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. In light of the current shortfall of inflation from 2 percent, the Committee will carefully monitor actual and expected progress toward its inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.

The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction, and it anticipates doing so until normalization of the level of the federal funds rate is well under way. This policy, by keeping the Committee's holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.

Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; James Bullard; Stanley Fischer; Esther L. George; Loretta J. Mester; Jerome H. Powell; Eric Rosengren; and Daniel K. Tarullo..."
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Tuesday, December 13, 2016

Odds At 95.4% (Extremely Likely) The U.S. Prime Rate Will Rise To 3.75% At Tomorrow's FOMC Monetary Policy Meeting

Prime Rate Forecast
Prime Rate Forecast
Latest Prime Rate Forecast

As of right now, the investors who trade in fed fund futures have odds at 95.4% (as implied by current pricing on contracts) that the Federal Open Market Committee (FOMC) will vote raise the target range for the benchmark fed funds rate by 25 basis points (0.25 percentage point), to 0.5% - 0.75%, at tomorrow's monetary policy meeting (extremely likely.)

The current United States Prime Rate, which went into effect on December 17, 2015, is 3.5%.  A 25 basis point rate hike tomorrow would cause the U.S. Prime Rate to rise to 3.75%.

NB: U.S. Prime Rate = (The Fed Funds Target Rate + 3)

=======================

The 3 major stock-market indices closed with record highs again today, with the Dow Jones Industrial Average (DJIA) creeping closer to 20,000.

  • The DJIA gained 114.78 points (0.58%) to close at 19,911.21 (CHART)
  • The broader S and P 500 Index added 14.76 points (0.654%) to close at 2,271.72 (CHART)
  • The NASDAQ Composite advanced by 51.29 points (0.948%) to close at 5,463.83 (CHART)

Stay tuned for tomorrow press release from The Fed, and reports on retail sales and industrial production.

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Current Odds

  • Current odds the U.S. Prime Rate will rise to 3.75% at tomorrow's FOMC monetary policy meeting: 95.4% (extremely likely), with remaining odds -- 4.6% (very unlikely) -- that short-term rates, including the U.S. Prime Rate, will remain at current levels.

    ==========

The odds associated with fed fund futures contracts -- widely accepted as the best predictor of what the FOMC will do with the benchmark Fed Funds Target Rate -- are constantly changing, so stay tuned for the latest odds.

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