Prime Rate

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

Monday, February 19, 2018

Odds Are Back Up To 83.1% (Likely) The U.S. Prime Rate Will Rise To 4.75% After The March 21, 2018 FOMC Monetary Policy Meeting

Prime Rate Forecast
Prime Rate Forecast
Prime Rate Forecast

As of right now, odds are back up to 83.1% that the Federal Open Market Committee (FOMC) will vote to raise the target range for the benchmark fed funds rate  from the current 1.25% - 1.50%, to 1.50% - 1.75% at the  March 21ST, 2018 monetary policy meeting (likely.)

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The current Prime Rate, which went into effect on December 14TH, 2017 is 4.50%.

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

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Economic data influencing the latest odds include readings on Inflation, Jobs, Retail Sales, Industrial Production, Housing, Manufacturing, The Services Sector, Energy, Business Optimism, Economic Activity and The Yield Curve.

Stay tuned for the latest odds...


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Current Odds

  • Current odds the U.S. Prime Rate will rise to 4.75% after the March 21ST, 2018 FOMC monetary policy meeting: 83.1%  (likely), with 16.9% odds (not likely) the U.S. Prime Rate will continue at 4.50%.

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Monday, February 05, 2018

Odds At 69.0% (Somewhat Likely) The U.S. Prime Rate Will Rise To 4.75% After The March 21, 2018 FOMC Monetary Policy Meeting

Prime Rate Forecast
Prime Rate Forecast
Prime Rate Forecast

As of right now, odds are at 69.0%  that the Federal Open Market Committee (FOMC) will vote to raise the target range for the benchmark fed funds rate  from 1.25% - 1.50% to 1.50% - 1.75% at the  March 21ST, 2018 monetary policy meeting (somewhat likely.)

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The current Prime Rate, which went into effect on December 14TH, 2017 is 4.50%.

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

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  • Average hourly earnings rose by 2.8857% year-on-year, according to the January jobs report, which has many thinking that healthy wage inflation has finally kicked in.  But, Y/Y, average weekly earnings rose by 2.586%, which is in line with the 2.6% Y/Y figure reported in the  Employment Cost Index for Q4 2017.
  • The Dow Jones Industrial Average (DJIA) lost 1,175.21 points today (-4.605%) and closed at 24,345.75, as investors worried about the business cycle and inflation.

    Since closing at a record high on January 26, 2018 -- 26,616.71 -- the DJIA has declined 8.532%.

    The broader S and P 500 Index has given up 7.795% since the January 26 record close, while the NASDAQ Composite slid 7.171%.

    The yield on the 10-Year Treasury Note ended the day at 2.77%.
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Responding To Widespread Consumer Abuses And Compliance Breakdowns By Wells Fargo, Federal Reserve Restricts Wells' Growth Until Firm Improves Governance And Controls. Concurrent With Fed Action, Wells To Replace Three Directors By April, One By Year End

From Friday's Federal Reserve press release:

"...Responding to recent and widespread consumer abuses and other compliance breakdowns by Wells Fargo, the Federal Reserve Board on Friday announced that it would restrict the growth of the firm until it sufficiently improves its governance and controls. Concurrently with the Board's action, Wells Fargo will replace three current board members by April and a fourth board member by the end of the year.

In addition to the growth restriction, the Board's consent cease and desist order with Wells Fargo requires the firm to improve its governance and risk management processes, including strengthening the effectiveness of oversight by its board of directors. Until the firm makes sufficient improvements, it will be restricted from growing any larger than its total asset size as of the end of 2017. The Board required each current director to sign the cease and desist order.

'We cannot tolerate pervasive and persistent misconduct at any bank and the consumers harmed by Wells Fargo expect that robust and comprehensive reforms will be put in place to make certain that the abuses do not occur again,' Chair Janet L. Yellen said. 'The enforcement action we are taking today will ensure that Wells Fargo will not expand until it is able to do so safely and with the protections needed to manage all of its risks and protect its customers.'

In recent years, Wells Fargo pursued a business strategy that prioritized its overall growth without ensuring appropriate management of all key risks. The firm did not have an effective firm-wide risk management framework in place that covered all key risks. This prevented the proper escalation of serious compliance breakdowns to the board of directors.

The Board's action will restrict Wells Fargo's growth until its governance and risk management sufficiently improves but will not require the firm to cease current activities, including accepting customer deposits or making consumer loans.

Emphasizing the need for improved director oversight of the firm, the Board has sent letters to each current Wells Fargo board member confirming that the firm's board of directors, during the period of compliance breakdowns, did not meet supervisory expectations. Letters were also sent to former Chairman and Chief Executive Officer John Stumpf and past lead independent director Stephen Sanger stating that their performance in those roles, in particular, did not meet the Federal Reserve's expectations..."
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Stay tuned for the latest odds...


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Current Odds

  • Current odds the U.S. Prime Rate will rise to 4.75% after the March 21ST, 2018 FOMC monetary policy meeting: 69.0%, with 31.0% odds the U.S. Prime Rate will continue at 4.50%.

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Wednesday, January 31, 2018

Odds At 83.1% (Likely) The U.S. Prime Rate Will Rise To 4.75% After The March 21, 2018 FOMC Monetary Policy Meeting

Prime Rate Forecast
Prime Rate Forecast
Prime Rate Forecast

As of right now, odds are at 83.1%  that the Federal Open Market Committee (FOMC) will vote to raise the target range for the benchmark fed funds rate  from 1.25% - 1.50% to 1.50% - 1.75% at the  March 21ST, 2018 monetary policy meeting (likely.)

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The current Prime Rate, which went into effect on December 14TH, 2017 is 4.50%.

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

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Jerome Hayden Powell
Jerome Hayden Powell

Federal Open Market Committee Unanimously Selects Jerome H. Powell To Serve As Its Chairman, Effective February 3, 2018

From today's FOMC press release:

"...The Federal Open Market Committee, at its annual organizational meeting this week, unanimously selected Jerome H. Powell to serve as its Chairman, effective February 3, 2018. He is scheduled to be sworn in as Chairman of the Board of Governors of the Federal Reserve System on the next business day at approximately 9 a.m. EST February 5..."

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Stay tuned for the latest odds...


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Current Odds

  • Current odds the U.S. Prime Rate will rise to 4.75% after the March 21ST, 2018 FOMC monetary policy meeting: 83.1%  (likely), with 16.9% odds (not likely) the U.S. Prime Rate will continue at 4.50%.

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First FOMC Meeting of 2018 Adjourned: U.S. Prime Rate Holds At 4.5%

United States Prime Rate continues at 4.50%
U.S. Prime Rate
The Federal Open Market Committee (FOMC) of the Federal Reserve has just adjourned its first monetary policy meeting of 2018 and, in accordance with our forecast, has voted to leave the benchmark target range for the federal funds rate at 1.25% - 1.50%. Therefore, the United States Prime Rate (a.k.a the Fed Prime Rate) will continue at the current 4.50%.

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 been rising at a solid rate. Gains in employment, household spending, and business fixed investment have been solid, and the unemployment rate has stayed low. On a 12-month basis, both overall inflation and inflation for items other than food and energy have continued to run below 2 percent. Market-based measures of inflation compensation have increased in recent months but 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 further gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market conditions will remain strong. Inflation on a 12‑month basis is expected to move up this year and to stabilize around the Committee's 2 percent objective over the medium term. Near-term risks to the economic outlook appear roughly balanced, but the Committee is monitoring inflation developments closely.

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 1-1/4 to 1‑1/2 percent. The stance of monetary policy remains accommodative, thereby supporting strong 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 further 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.

Voting for the FOMC monetary policy action were Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Thomas I. Barkin; Raphael W. Bostic; Lael Brainard; Loretta J. Mester; Jerome H. Powell; Randal K. Quarles; and John C. Williams..."

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Sunday, January 28, 2018

Odds At 93.8% (Likely) The U.S. Prime Rate Will Continue At 4.50% After The January 31, 2018 FOMC Monetary Policy Meeting

Prime Rate Forecast
Prime Rate Forecast
Prime Rate Forecast

As of right now, odds are at 93.8%  that the Federal Open Market Committee (FOMC) will vote to leave the target range for the benchmark fed funds rate  at 1.25% - 1.50% at the  January 31ST, 2018 monetary policy meeting (likely.)

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The current Prime Rate, which went into effect on December 14TH, 2017 is 4.50%.

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

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Economic data influencing the latest odds include readings on Gross Domestic Product, Inflation, Jobs, Retail Sales, Industrial Production, Housing, Energy and The Yield Curve.

Stay tuned for Wednesday's FOMC press release... 

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Current Odds

  • Current odds the U.S. Prime Rate will remain at 4.50% after the January 31ST, 2018 FOMC monetary policy meeting: 93.8%  (likely), with 6.2% odds (unlikely) that the U.S. Prime Rate will rise to 4.75%.

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Friday, December 22, 2017

Odds At 97.9% (Very Likely) The U.S. Prime Rate Will Continue At 4.50% After The January 31, 2018 FOMC Monetary Policy Meeting

Prime Rate Forecast
Prime Rate Forecast
Prime Rate Forecast

As of right now, odds are at 97.9%  that the Federal Open Market Committee (FOMC) will vote to leave the target range for the benchmark fed funds rate  at 1.25% - 1.50% at the  January 31ST, 2018 monetary policy meeting (very likely.)

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The current Prime Rate, which went into effect on December 14TH, 2017 is 4.50%.

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

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Economic data influencing the latest odds include readings on Gross Domestic Product, Inflation, Jobs, Retail Sales, Industrial Production, Housing Starts, The Yield Curve, Consumer Sentiment, Existing Home Sales and New Homes Sales.

Stay tuned...
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Current Odds

  • Current odds the U.S. Prime Rate will remain at 4.50% after the January 31ST, 2018 FOMC monetary policy meeting: 97.9%  (very likely), with 2.1% odds (very unlikely) that the U.S. Prime Rate will rise to 4.75%.

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Wednesday, December 13, 2017

United States Prime Rate Rises to 4.50%

U.S. Prime Rate Is Now 4.50%
The Federal Open Market Committee (FOMC) of the Federal Reserve has just adjourned its eighth and final monetary policy meeting of 2017, and, in accordance with our latest forecast, has voted to raise the benchmark target range for the federal funds rate from 1.00% - 1.25% to 1.25% - 1.50%.  Therefore, the United States Prime Rate (a.k.a the Fed Prime Rate) is 4.50%, effective tomorrow (December 14, 2017.)

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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 November indicates that the labor market has continued to strengthen and that economic activity has been rising at a solid rate. Averaging through hurricane-related fluctuations, job gains have been solid, and the unemployment rate declined further. Household spending has been expanding at a moderate rate, and growth in business fixed investment has picked up in recent quarters. On a 12-month basis, both overall inflation and inflation for items other than food and energy have declined this year and are running 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. Hurricane-related disruptions and rebuilding have affected economic activity, employment, and inflation in recent months but have not materially altered the outlook for the national economy. Consequently, the Committee continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market conditions will remain strong. Inflation on a 12‑month basis is expected to remain somewhat below 2 percent in the near term but to stabilize around the Committee's 2 percent objective over the medium term. Near-term risks to the economic outlook appear roughly balanced, but the Committee is monitoring inflation developments closely.

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 1-1/4 to 1‑1/2 percent. The stance of monetary policy remains accommodative, thereby supporting strong 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.

Voting for the FOMC monetary policy action were Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; Patrick Harker; Robert S. Kaplan; Jerome H. Powell; and Randal K. Quarles. Voting against the action were Charles L. Evans and Neel Kashkari, who preferred at this meeting to maintain the existing target range for the federal funds rate..."
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Tuesday, December 12, 2017

Odds At 100% (Certain) The U.S. Prime Rate Will Rise To At Least 4.50% After Tomorrow's FOMC Monetary Policy Meeting

Prime Rate Forecast
Prime Rate Forecast
Prime Rate Forecast

As of right now, odds are at 100%  that the Federal Open Market Committee (FOMC) will vote to raise the target range for the benchmark fed funds rate by at least 25 basis points (0.25 percentage point) at tomorrow's monetary policy meeting (certain.)

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The current Prime Rate, which went into effect on June 15, 2017, is 4.25%A 25 basis point rate increase tomorrow would cause  the U.S. Prime Rate to rise to 4.50%.

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

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Despite the Federal Reserve's preferred inflation measure continuing below the Fed's 2% target, and persistent and serious concerns about wage growth, the FOMC will raise short-term rates tomorrow.

A perfectly valid argument against a rate hike could be: why risk dampening an economic recovery that has taken an inordinate amount of time to gain real strength?  A flattening yield curve adds further support for this.

Stay tuned for tomorrow's FOMC decision and press release...

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Current Odds

  • Current odds the U.S. Prime Rate will rise to 4.50% after tomorrow's FOMC monetary policy meeting: 87.6%  (likely), with 12.4% odds (unlikely) that the U.S. Prime Rate will rise to 4.75%.

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Friday, November 10, 2017

Odds At 91.5% (Very Likely) The U.S. Prime Rate Will Rise To 4.50% After The December 13, 2017 FOMC Monetary Policy Meeting

Prime Rate Forecast
Prime Rate Forecast
Prime Rate Forecast

As of right now, odds are at 91.5%  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 1.25% - 1.50% at the December 13TH, 2017 monetary policy meeting (very likely.)

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The current Prime Rate, which went into effect on June 15, 2017, is 4.25%A 25 basis point rate increase on December 13TH, 2017 would cause the U.S. Prime Rate to rise to 4.50%.

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

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Current Odds

  • Current odds the U.S. Prime Rate will rise to 4.50% after the December 13TH, 2017 FOMC monetary policy meeting: 91.5%  (very likely), with 8.5% odds (very unlikely) that the U.S. Prime Rate will rise to 4.75%.

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Thursday, November 02, 2017

Donald Trump Nominates Jerome Powell To Be Next Fed Chair

Donald Trump Nominates Jerome Powell To Be Next Fed Chair
Jerome Powell
Here's a clip from today's press release:

"...Thank you, Mr. President, for the faith you have shown in me through this nomination. I am both honored and humbled by this opportunity to serve our great country. If I am confirmed by the Senate, I will do everything within my power to achieve the goals assigned to the Federal Reserve by the Congress: stable prices and maximum employment.

I want to thank my wife, Elissa, for her love, support, and wise counsel. Without her, I would not be standing here. We are thinking today of our three children, and of the world they are inheriting. My five siblings and I are also thinking today of our parents, who gave us so many gifts, most of all a loving home.

In the years since the global financial crisis ended, our economy has made substantial progress toward full recovery. By many measures we are close to full employment, and inflation has gradually moved up toward our target.

Our financial system is without doubt far stronger and more resilient than it was before the crisis. Our banks have much higher capital and liquidity, are more aware of the risks they run, and are better able to manage those risks. While post-crisis improvements in regulation and supervision have helped us to achieve these gains, I will continue to work with my colleagues to ensure that the Federal Reserve remains vigilant and prepared to respond to changes in markets and evolving risks.

Finally, I have had the great privilege of serving under Chairman Bernanke and Chair Yellen, who guided the economy with insight and courage through difficult times while moving monetary policy toward greater transparency and predictability. Each of them embodies the highest ideals of public service--unquestioned integrity and unflinching commitment to fulfilling our mandate. Inside the Federal Reserve, we understand that monetary policy decisions matter for American families and communities. I strongly share that sense of mission and am committed to making decisions with objectivity and based on the best available evidence, in the longstanding tradition of monetary policy independence.

Mr. President, thank you again for this extraordinary opportunity to serve the American people..."

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