United States Prime Rate

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

Wednesday, October 28, 2015

Current Odds On Prime Rate Increase for the December 16, 2015 FOMC Monetary Policy Meeting At 43% (Somewhat Likely)

Prime Rate Forecast - Predictions - www.FedPrimeRate.com
Prime Rate Forecast - Predictions
Latest Prime Rate Forecast

As of right now, the investors who trade in fed funds futures at the CME Group have odds at 43% (as implied by current pricing on contracts) that the Federal Open Market Committee (FOMC) will vote to raise the benchmark Federal Funds Target Rate by at least 25 basis points (0.25 percentage point) at the December 16TH, 2015 monetary policy meeting (somewhat likely.)

Here's a key snippet from today's FOMC statement, words which the Committee is likely to include again in the December 16TH post-meeting release:


"...The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run..."
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Current Odds

  • Current odds that the Prime Rate (currently 3.25%) will rise by at least 25 basis points at the December 16TH, 2016 FOMC monetary policy meeting: 43% (somewhat likely.)

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  • Current odds that the Prime Rate (currently 3.25%) will rise by at least 25 basis points at the January 27TH, 2016 FOMC monetary policy meeting: 52% (somewhat likely.)

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  • Current odds that the Prime Rate (currently 3.25%) will rise by at least 25 basis points at the March 16TH, 2016 FOMC monetary policy meeting: 67% (somewhat likely.)

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  • Current odds that the Prime Rate (currently 3.25%) will rise by at least 25 basis points at the April 27TH, 2016 FOMC monetary policy meeting: 72% (somewhat likely.)

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  • Current odds that the Prime Rate (currently 3.25%) will rise by at least 25 basis points at the June 15TH, 2016 FOMC monetary policy meeting: 80% (likely.)

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  • Current odds that the Prime Rate (currently 3.25%) will rise by at least 25 basis points at the July 27TH, 2016 FOMC monetary policy meeting: 83% (likely.)

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  • Current odds that the Prime Rate (currently 3.25%) will rise by at least 25 basis points at the September 21ST, 2016 FOMC monetary policy meeting: 88% (likely.)

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  • Current odds that the Prime Rate (currently 3.25%) will rise by at least 25 basis points at the November  2ND, 2016 FOMC monetary policy meeting: 91% (very likely.)

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  • NB: US Prime Rate = (The Fed 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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Seventh FOMC Meeting of 2015 Adjourned: U.S. Prime Rate Holds At 3.25%

FOMC votes to leave short-term rates unchanged; US Prime Rate to continue at 3.25%
US Prime Rate Holds at 3.25%
The Federal Open Market Committee (FOMC) of the Federal Reserve has just adjourned its seventh monetary policy meeting of 2015 and, in accordance with our most recent forecast, has voted to leave short-term interest rates at their current levels. Therefore, the benchmark target range for the federal funds rate will remain at 0% - 0.25%, and the Wall Street JournalĀ® Prime Rate (a.k.a the U.S., national, WSJ or Fed Prime Rate) will continue at the current 3.25%.

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 suggests that economic activity has been expanding at a moderate pace. Household spending and business fixed investment have been increasing at solid rates in recent months, and the housing sector has improved further; however, net exports have been soft. The pace of job gains slowed and the unemployment rate held steady. Nonetheless, labor market indicators, on balance, show that underutilization of labor resources has diminished since early this year. Inflation has continued to run below the Committee's longer-run objective, partly reflecting declines in energy prices and in prices of non-energy imports. Market-based measures of inflation compensation moved slightly lower; survey-based measures of longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace, with labor market indicators continuing to move toward levels the Committee judges consistent with its dual mandate. The Committee continues to see the risks to the outlook for economic activity and the labor market as nearly balanced but is monitoring global economic and financial developments. Inflation is anticipated to remain near its recent low level in the near term but the Committee expects inflation to rise gradually toward 2 percent over the medium term as the labor market improves further and the transitory effects of declines in energy and import prices dissipate. The Committee continues to monitor inflation developments closely.

To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate. In determining whether it will be appropriate to raise the target range at its next meeting, the Committee will assess progress--both realized and expected--toward 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 anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen some further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term
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The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. This policy, by keeping the Committee's holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.

When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run.

Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; Charles L. Evans; Stanley Fischer; Dennis P. Lockhart; Jerome H. Powell; Daniel K. Tarullo; and John C. Williams. Voting against the action was Jeffrey M. Lacker, who preferred to raise the target range for the federal funds rate by 25 basis points at this meeting..."
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Friday, October 02, 2015

Current Odds On Prime Rate Increase for the October 28, 2015 FOMC Monetary Policy Meeting At 5% (Very Unlikely)

Prime Rate Forecast - Predictions - www.FedPrimeRate.com
Prime Rate Forecast - Predictions
Latest Prime Rate Forecast

As of right now, the investors who trade in fed funds futures at the CME Group have odds at 5% (as implied by current pricing on contracts) that the Federal Open Market Committee (FOMC) will vote to raise the benchmark Federal Funds Target Rate by at least 25 basis points (0.25 percentage point) at the October 28TH, 2015 monetary policy meeting (very unlikely.)

This morning's jobs report was weaker than most economists expected.  142,000 workers were added to nonfarm payrolls last month, with both July and August jobs figures revised to the negative. According to the Labor Department, wages were stagnant during September, while the civilian labor force participation rate waned from 62.6% to 62.4%, a low not seen since Star Wars dominated movie theaters.

September's employment and wage readings caused a major shift in fed funds futures, with the odds now predicting that the Fed will leave short-term rates at zero deep into 2016.


Current Odds


  • Current odds that the Prime Rate will rise by at least 25 basis points at the December 16TH, 2015 FOMC monetary policy meeting: 30% (not likely.)

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  • Current odds that the Prime Rate will rise by at least 25 basis points at the January 27TH, 2016 FOMC monetary policy meeting: 40% (not likely.)

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  • Current odds that the Prime Rate will rise by at least 25 basis points at the March 16TH, 2016 FOMC monetary policy meeting: 52% (somewhat likely.)

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  • Current odds that the Prime Rate will rise by at least 25 basis points at the April 27TH, 2016 FOMC monetary policy meeting: 56% (somewhat likely.)

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  • Current odds that the Prime Rate will rise by at least 25 basis points at the June 15TH, 2016 FOMC monetary policy meeting: 66% (somewhat likely.)

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  • Current odds that the Prime Rate will rise by at least 25 basis points at the July 27TH, 2016 FOMC monetary policy meeting: 73% (somewhat likely.)

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    Current odds that the Prime Rate will rise by at least 25 basis points at the September 21ST, 2016 FOMC monetary policy meeting: 78% (somewhat likely.)


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  • NB: US Prime Rate = (The Fed 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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