Odds At 4% (Very Unlikely) The U.S. Prime Rate Will Rise At The June 15, 2016 FOMC Monetary Policy Meeting

Prime Rate Forecast

Latest Prime Rate Forecast

As of right now, the investors who trade in fed fund futures via the CME Group have odds at 4% (as implied by current pricing on contracts) that the Federal Open Market Committee (FOMC) will vote to raise the target range for the benchmark fed funds rate by at least 25 basis points (0.25 percentage point) at the June 15^TH, 2016 monetary policy meeting (very unlikely.)

The current United States Prime Rate, which went into effect on December 17, 2015, is 3.5%.

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

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The latest odds on a rate increase at some point during the rest of 2016 declined in response to recent economic data, including readings on jobs, inflation, wages, GDP, manufacturing, housing, consumer confidence and consumer sentiment.

Earlier today, the Labor Department reported that nonfarm payrolls increased by a very tepid 38,000 during May, with negative revisions for both March and April, and the labor force participation rate declined from 62.8% to 62.6%.

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Current Odds

• Current odds that the Prime Rate (currently 3.5%) will rise by at least 25 basis points at the June 15^TH, 2016 FOMC monetary policy meeting: 4% (very unlikely.)
  
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• Current odds that the Prime Rate (currently 3.5%) will rise by at least 25 basis points at the July 27^TH, 2016 FOMC monetary policy meeting: 31% (not likely.)
  
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• Current odds that the Prime Rate (currently 3.5%) will rise by at least 25 basis points at the September 21^ST, 2016 FOMC monetary policy meeting: 44% (on the fence.)
  
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• Current odds that the Prime Rate (currently 3.5%) will rise by at least 25 basis points at the November 2^ND, 2016 FOMC monetary policy meeting: 45% (on the fence.)
  
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• Current odds that the Prime Rate (currently 3.5%) will rise by at least 25 basis points at the December 14^TH, 2016 FOMC monetary policy meeting: 61% (somewhat likely.)
  
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• Current odds that the Prime Rate (currently 3.5%) will rise by at least 25 basis points at the February 1^ST, 2017 FOMC monetary policy meeting: 64% (somewhat likely.)
  
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• NB: United States Prime Rate = (The Fed Funds Target Rate + 3)

The odds associated with fed fund futures contracts -- widely accepted as the best predictor of what the FOMC will do with the benchmark Fed Funds Target Rate -- are constantly changing, so stay tuned for the latest odds.

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