Prime Rate

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

Monday, November 11, 2019

Odds At 100% (Certain) The United States Prime Rate Will Hold At 4.75% After The December 11, 2019 FOMC Monetary Policy Meeting

United States Prime Rate Prediction
Prime Rate Prediction
Prime Rate Forecast

As of right now, our odds are at 100% the Federal Open Market Committee (FOMC) will vote to maintain the target range for the benchmark fed funds rate at the current 1.50% - 1.75% at the December 11TH, 2019 monetary policy meeting (certain), and keep the United States Prime Rate at 4.75%.

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The current U.S. Prime Rate was lowered from 5.00% to 4.75% on October 30TH, 2019.

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

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Manufacturing: The PMI® for October 2019 came in at 48.3%.  While this was an improvement over the September figure, it still indicates contraction. This makes three consecutive months of a below-50 reading:

  • October 2019: 48.3%
  • September 2019: 47.8%
  • August 2019: 49.1%

For the PMI, any figure below 50% indicates contraction.
 
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Stay tuned for the latest odds, and for current U.S. economic data (inflation, jobs, economic growth, wages, etc.) 


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Current Odds

  • Current odds the United States Prime Rate will hold at 4.75% after the December 11TH, 2019 FOMC monetary policy meeting: 100% (certain.)

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Wednesday, October 30, 2019

Seventh FOMC Meeting of 2019 Adjourned: United States Prime Rate Is Cut To 4.75%

United States Prime Rate Cut to 4.75%
U.S. Prime Rate
The Federal Open Market Committee (FOMC) of the Federal Reserve System has just adjourned its seventh monetary policy meeting of 2019 and, in accordance with our latest forecast, has voted to lower the benchmark target range for the federal funds rate to 1.50% - 1.75%. Therefore, the United States Prime Rate (a.k.a the Fed Prime Rate) is now 4.75%.

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 September indicates that the labor market remains strong and that economic activity has been rising at a moderate rate. Job gains have been solid, on average, in recent months, and the unemployment rate has remained low. Although household spending has been rising at a strong pace, business fixed investment and exports remain weak. On a 12-month basis, overall inflation and inflation for items other than food and energy are running below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. In light of the implications of global developments for the economic outlook as well as muted inflation pressures, the Committee decided to lower the target range for the federal funds rate to 1-1/2 to 1-3/4 percent. This action supports the Committee's view that sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee's symmetric 2 percent objective are the most likely outcomes, but uncertainties about this outlook remain. The Committee will continue to monitor the implications of incoming information for the economic outlook as it assesses the appropriate path of the target range for the federal funds rate.

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 maximum employment objective and its symmetric 2 percent inflation objective. 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.

Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michelle W. Bowman; Lael Brainard; James Bullard; Richard H. Clarida; Charles L. Evans; and Randal K. Quarles. Voting against this action were: Esther L. George and Eric S. Rosengren, who preferred at this meeting to maintain the target range at 1-3/4 percent to 2 percent..."

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Friday, October 04, 2019

Odds At 90% (Likely) The United States Prime Rate Will Be Cut To 4.75% After The October 30, 2019 FOMC Monetary Policy Meeting

United States Prime Rate Forecast
Prime Rate Forecast
Prime Rate Forecast

As of right now, our odds are at 90% the Federal Open Market Committee (FOMC) will vote to cut the target range for the benchmark fed funds rate, from the current 1.75% - 2.00%, to  1.50% - 1.75% at the October 30TH, 2019 monetary policy meeting (likely.)

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The current U.S. Prime Rate, which went into effect on September 19TH, 2019, is 5.00%.

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

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Although the headline (U-3) unemployment rate fell to 3.5% last month, a 50-year low, there were two key negatives in the September jobs report:

  • Average Hourly Earnings were at $28.09 last month; the month-on-month change was -$0.01 (-0.036%.)
  • Average Weekly Earnings were at $966.30 last month; the month-to-month change was -$0.34 (-0.035%.)

Adding to economic worries: for two months in a row, the manufacturing sector contracted, according to the Institute for Supply Management® (ISM®.)  The Purchasing Manager's Index (PMI®) for August 2019 was 49.1%, while the September reading was 47.8%.  For the PMI, any figure below 50% implies contraction.

And then there's the trade war...
 
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Stay tuned for the latest odds, and for current U.S. economic data (inflation, jobs, economic growth, wages, etc.) 


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Current Odds

  • Current odds the United States Prime Rate will be cut to 4.75% after the October 30TH, 2019 FOMC monetary policy meeting: 90% (likely.)

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Monday, September 23, 2019

FOMC Meeting Schedule for 2020

Here's the 2020 meeting schedule for the Federal Open Market Committee (FOMC.)

Why is this schedule important to you? Because it's at these monetary policy meetings that the FOMC votes on whether to raise, lower or make no changes to the target range for Fed Funds Target Rate, and when the Fed Funds Target Rate changes, the United States Prime Rate (also known as the Fed Prime Rate) will also change (how the United States Prime Rate works):

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  • January 29, 2020

  • March 18, 2020
    (+ Press Conference + Economic Projections)

  • April 29, 2020

  • June 10, 2020
    (+ Press Conference + Economic Projections)

  • July 29, 2020

  • September 16, 2020
    (+ Press Conference + Economic Projections)

  • November 5, 2020

  • December 16, 2020
    (+ Press Conference + Economic Projections)

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Wednesday, September 18, 2019

Sixth FOMC Meeting of 2019 Adjourned: United States Prime Rate Is Lowered To 5.00%

United States Prime Rate lowered to 5.00%
U.S. Prime Rate
The Federal Open Market Committee (FOMC) of the Federal Reserve System has just adjourned its sixth monetary policy meeting of 2019 and, in accordance with our latest forecast, has voted to lower the benchmark target range for the federal funds rate to 1.75% - 2.00%. Therefore, the United States Prime Rate (a.k.a the Fed Prime Rate) is now 5.00%.

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 July indicates that the labor market remains strong and that economic activity has been rising at a moderate rate. Job gains have been solid, on average, in recent months, and the unemployment rate has remained low. Although household spending has been rising at a strong pace, business fixed investment and exports have weakened. On a 12-month basis, overall inflation and inflation for items other than food and energy are running below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. In light of the implications of global developments for the economic outlook as well as muted inflation pressures, the Committee decided to lower the target range for the federal funds rate to 1-3/4 to 2 percent. This action supports the Committee's view that sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee's symmetric 2 percent objective are the most likely outcomes, but uncertainties about this outlook remain. As the Committee contemplates the future path of the target range for the federal funds rate, it will continue to monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion, with a strong labor market and inflation near its symmetric 2 percent objective.

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 maximum employment objective and its symmetric 2 percent inflation objective. 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.

Voting for the monetary policy action were Jerome H. Powell, Chair, John C. Williams, Vice Chair; Michelle W. Bowman; Lael Brainard; Richard H. Clarida; Charles L. Evans; and Randal K. Quarles. Voting against the action were James Bullard, who preferred at this meeting to lower the target range for the federal funds rate to 1-1/2 to 1-3/4 percent; and Esther L. George and Eric S. Rosengren, who preferred to maintain the target range at 2 percent to 2-1/4 percent..."

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Sunday, August 18, 2019

Odds At 100% (Certain) The United States Prime Rate Will Be Cut To 5.00% After The September 18, 2019 FOMC Monetary Policy Meeting

United States Prime Rate Forecast
Prime Rate Forecast
Prime Rate Forecast

As of right now, our odds are at 100% the Federal Open Market Committee (FOMC) will vote to lower the target range for the benchmark fed funds rate from 2.00% - 2.25% to 1.75% - 2.00% at the September 18TH, 2019 monetary policy meeting (certain.)

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The current U.S. Prime Rate, which went into effect on July 31ST, 2019, is 5.25%.

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

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Judging by recent moves by investors, a global recession is in the offing.

On Thursday, August 15, 2019, the yield on the 30-year U.S. Treasury bond closed below 2% for the first time ever, ending the day at 1.98%

Another ominous sign: many economic indicators are often at their strongest, as they are now, before an economic downturn.
 
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Stay tuned for the latest odds, and for current U.S. economic data (inflation, jobs, economic growth, wages, etc.) 

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U.S. Treasury Yield Curve for Thursday, August 15, 2019
U.S. Treasury Yield Curve for Thursday, August 15, 2019

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Current Odds

  • Current odds the United States Prime Rate will be cut to 5.00% after the September 18TH, 2019 FOMC monetary policy meeting: 100% (certain.)

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Wednesday, August 07, 2019

Odds At 80% (Likely) The United States Prime Rate Will Be Cut To 5.00% After The September 18, 2019 FOMC Monetary Policy Meeting

United States Prime Rate Forecast
Prime Rate Forecast
Prime Rate Forecast

As of right now, our odds are at 80% the Federal Open Market Committee (FOMC) will vote to lower the target range for the benchmark fed funds rate from 2.00% - 2.25% to 1.75% - 2.00% at the September 18TH, 2019 monetary policy meeting (likely.)

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The current U.S. Prime Rate, which went into effect on July 31ST, 2019, is 5.25%.

=======

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

=======

Stay tuned for the latest odds, and for current U.S. economic data (inflation, jobs, economic growth, wages, etc.) 


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Current Odds

  • Current odds the United States Prime Rate will be cut to 5.00% after the September 18TH, 2019 FOMC monetary policy meeting: 80% (likely.)

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Wednesday, July 31, 2019

Fifth FOMC Meeting of 2019 Adjourned: United States Prime Rate Is Now 5.25%

United States Prime Rate lowered to 5.25%
U.S. Prime Rate
The Federal Open Market Committee (FOMC) of the Federal Reserve System has just adjourned its fifth monetary policy meeting of 2019 and, in accordance with our latest forecast, has voted to lower the benchmark target range for the federal funds rate to 2.00% - 2.25%. Therefore, the United States Prime Rate (a.k.a the Fed Prime Rate) is now 5.25%.

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 June indicates that the labor market remains strong and that economic activity has been rising at a moderate rate. Job gains have been solid, on average, in recent months, and the unemployment rate has remained low. Although growth of household spending has picked up from earlier in the year, growth of business fixed investment has been soft. On a 12-month basis, overall inflation and inflation for items other than food and energy are running below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. In light of the implications of global developments for the economic outlook as well as muted inflation pressures, the Committee decided to lower the target range for the federal funds rate to 2 to 2-1/4 percent. This action supports the Committee's view that sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee's symmetric 2 percent objective are the most likely outcomes, but uncertainties about this outlook remain. As the Committee contemplates the future path of the target range for the federal funds rate, it will continue to monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion, with a strong labor market and inflation near its symmetric 2 percent objective.

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 maximum employment objective and its symmetric 2 percent inflation objective. 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 conclude the reduction of its aggregate securities holdings in the System Open Market Account in August, two months earlier than previously indicated.

Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michelle W. Bowman; Lael Brainard; James Bullard; Richard H. Clarida; Charles L. Evans; and Randal K. Quarles. Voting against the action were Esther L. George and Eric S. Rosengren, who preferred at this meeting to maintain the target range for the federal funds rate at 2-1/4 to 2-1/2 percent..."

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Saturday, July 13, 2019

Odds At 100% (Certain) The United States Prime Rate Will Be Cut To 5.25% After The July 31, 2019 FOMC Monetary Policy Meeting

United States Prime Rate Forecast
Prime Rate Forecast
Prime Rate Forecast

As of right now, our odds are at 100% the Federal Open Market Committee (FOMC) will vote to lower the target range for the benchmark fed funds rate from 2.25% - 2.50% to 2.00% - 2.25% at the July 31ST, 2019 monetary policy meeting (certain.)

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The current U.S. Prime Rate, which went into effect on December 20TH, 2018, is 5.50%.

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

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Here's a clip from Fed Boss Jerome H. Powell's Semiannual Monetary Policy Report to the Congress (July 10,2019.)  Note text in bold:

"...At the time of our May meeting, we were mindful of the ongoing crosscurrents from global growth and trade, but there was tentative evidence that these crosscurrents were moderating. The latest data from China and Europe were encouraging, and there were reports of progress in trade negotiations with China. Our continued patient stance seemed appropriate, and the Committee saw no strong case for adjusting our policy rate.

Fed Chairman Jerome H. Powell
Fed Chairman Jerome H. Powell
Since our May meeting, however, these crosscurrents have reemerged, creating greater uncertainty. Apparent progress on trade turned to greater uncertainty, and our contacts in business and agriculture report heightened concerns over trade developments. Growth indicators from around the world have disappointed on net, raising concerns that weakness in the global economy will continue to affect the U.S. economy. These concerns may have contributed to the drop in business confidence in some recent surveys and may have started to show through to incoming data.

In our June meeting statement, we indicated that, in light of increased uncertainties about the economic outlook and muted inflation pressures, we would closely monitor the implications of incoming information for the economic outlook and would act as appropriate to sustain the expansion. Many FOMC participants saw that the case for a somewhat more accommodative monetary policy had strengthened. Since then, based on incoming data and other developments, it appears that uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook. Inflation pressures remain muted..."

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Stay tuned for the latest odds, and for current U.S. economic data (inflation, jobs, economic growth, wages, etc.) 

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Current Odds

  • Current odds the United States Prime Rate will be cut to 5.25% after the July 31ST, 2019 FOMC monetary policy meeting: 100% (certain.)

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Tuesday, July 02, 2019

Odds At 80% (Likely) The United States Prime Rate Will Be Cut To 5.25% After The July 31, 2019 FOMC Monetary Policy Meeting

United States Prime Rate Forecast
Prime Rate Forecast
Prime Rate Forecast

As of right now, our odds are at 80% the Federal Open Market Committee (FOMC) will vote to lower the target range for the benchmark fed funds rate from 2.25% - 2.50% to 2.00% - 2.25% at the  July 31ST, 2019 monetary policy meeting (likely.)

=======

The current U.S. Prime Rate, which went into effect on December 20TH, 2018, is 5.50%.

=======

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

=======

Stay tuned for the latest odds, and for current U.S. economic data (inflation, jobs, economic growth, wages, etc.) 


======= 

Current Odds

  • Current odds the United States Prime Rate will be cut to 5.25% after the July 31ST, 2019 FOMC monetary policy meeting: 80% (likely.)

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