Prime Rate

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

Monday, April 28, 2008

Fed Likely to Cut Short-Term Rates by 25 Basis Points On Wednesday

The next Federal Open Market Committee (FOMC) monetary policy meeting is just 2 days away, and right now the fed funds futures market is pretty confident that the Fed will cut short-term rates by 25 basis points (0.25 percentage point) on Wednesday.

The futures market currently has odds at 80% that the Fed will cut the benchmark Fed Funds Target Rate by 25 basis points two days from now. 20% in the market are betting that the Fed will leave short-term rates at their current level when the next FOMC meeting adjourns on Wednesday.


Summary of The Latest Odds

As of right now, the investors who trade in fed funds futures at the Chicago Board of Trade have odds at 80% (as implied by current pricing on contracts) that the FOMC will vote to lower the benchmark Federal Funds Target Rate by at least 25 basis points (0.25 percentage point) at the April 30TH, 2008 monetary policy meeting.


Summary of the Latest Prime Rate Forecast:
  • Current odds that the Prime Rate will be cut by at least 25 basis points at the April 30TH FOMC monetary policy meeting: 80% (likely)
  • NB: U.S. Prime Rate = (The Federal Funds Target Rate + 3)

The odds related to federal-funds futures contracts -- widely accepted as the best predictor of where the FOMC will take the benchmark Fed Funds Target Rate -- are constantly changing, so stay tuned for the latest odds.

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