United States Prime Rate

also known as the Fed, National or United States Prime Rate,
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Tuesday, October 24, 2006

Fed Decision On Interest Rates Tomorrow: No Change Expected

Later today, the Federal Open Market Committee (FOMC) will convene the seventh monetary policy meeting of 2006, a meeting which will span 2 days. Tomorrow afternoon, the FOMC will announce their decision on interest rates, and it is fully expected that the group will vote to leave interest rates alone. This means the benchmark Fed Funds Target Rate will remain at 5.25%, and the Wall Street Journal Prime Rate (the U.S. Prime Rate) will remain at the current 8.25%.

The next monetary policy meeting, which will be the last of 2006, will take place on December 12, and as of right now, the vast majority of economists and investors are predicting that the Fed will leave rates alone again after the December meeting.

What is the Fed Funds Futures market predicting for tomorrow? Right now, the odds are at a mere 2% (according to pricing on contracts) that the FOMC will vote to lower rates by 25 basis points (0.25 percentage point.) In other words, for tomorrow, a move on interest rates is very unlikely.

Stay tuned: we'll have more odds and analysis after the Fed issues a press release following tomorrow's policy meeting, as is their custom.

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