Odds At 92.8% (Very Likely) The U.S. Prime Rate Will Continue At 3.5% After The July 27, 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 92.8% (as implied by current pricing on contracts) that the Federal Open Market Committee (FOMC) will vote leave the target range for the benchmark fed funds rate at 0.25% - 0.5% at the July 27^TH, 2016 monetary policy meeting (very likely.)

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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Brexit

The results of United Kingdom referendum on leaving the European shocked many, and shocked financial markets too, causing significant heartburn around the world.

It was close, with 51.9% voting to leave, and 48.1% voting to stay.

The news caused a significant shift in interest-rate futures.  Not only are traders certain that the Fed will not raise short-term rates, including the U.S. Prime Rate, on July 27, but they are now pricing in a 7.2% chance the Fed will cut the Prime Rate back down to 3.25% next month.

Stay tuned for the latest odds...

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Current Odds

• Current odds that the Prime Rate will continue at 3.5% after the July 27^TH, 2016 FOMC monetary policy meeting: 92.8% (very likely.)
  
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• Current odds that the Prime Rate will continue at 3.5% after the September 21^ST, 2016 FOMC monetary policy meeting: 92.8% (very likely.)
  
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• Current odds that the Prime Rate will continue at 3.5% after the November 2^ND, 2016 FOMC monetary policy meeting: 91.1% (very likely.)
  
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• Current odds that the Prime Rate will continue at 3.5% after the December 14^TH, 2016 FOMC monetary policy meeting: 71.0% (somewhat likely), with a 23.2% chance of a rate increase, and a 5.3% chance of a rate cut.
  
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• Current odds that the Prime Rate will continue at 3.5% after the February 1^ST, 2017 FOMC monetary policy meeting: 69.7% (somewhat likely), with a 24.1% chance of a rate increase, and a 5.2% chance of a rate cut.
  
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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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