Futures Market 100% Certain U.S. Prime Rate Will Hold At 3.25% After The January 27 FOMC Monetary Policy Meeting

I'm not a Christmas person, mainly because of the "consumerism on steroids" aspect of the tradition. However, I do like Christmas music, Christmas cheer and a certain movie that always comes on around Christmas time. No, I'm not talking about the Dickens favorite A Christmas Carol -- though I hold the story in high regard. No, my favorite Christmas movie is It's A Wonderful Life. If someone was to say to me that the 1946 Frank Capra classic is a mediocre or bad movie, I know I'd be talking to either a) a liar or b) someone who needs to see a psychiatrist. I watched it on NBC last month, and, even though I've seen it a few times before, the film still managed to give me a...well, let's call it a sore throat. It's a uniquely American story, and American filmmaking at it's finest.

The movie had a special significance at the end of 2009. The Mr. Potters of the world pocketing massive bonuses while suckling at the teat of the American taxpayer, as unnumbered small business owners struggle for survival.

So when I found a new website with a mission of getting Americans to ditch the big banks and move their money to community-focused financial institutions, I wasn't surprised that the site's creators used clips from It's A Wonderful Life to make the best possible case for "moving your money." I'm am very happy to be able to share this YouTube clip here at the Prime Rate blog:

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As of right now, the investors who trade in fed funds futures at the Chicago Board of Trade have odds at 100% (as implied by current pricing on contracts) that the FOMC will vote to leave the benchmark target range for the Federal Funds Rate at its current level at the January 27^TH, 2010 monetary policy meeting.


Summary of the Latest Prime Rate Forecast:

• Current odds that the Prime Rate will remain at the current 3.25% after the January 27^TH, 2010 FOMC monetary policy meeting is adjourned: 100% (certain)
• 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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