Odds At 82% (Likely) The U.S. Prime Rate Will Remain At 3.5% After The September 21, 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 82% (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 September 21^ST, 2016 monetary policy meeting (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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Traders are still confident that the Fed will remain on hold with short-term rates at next month's monetary policy meeting, despite a very positive July jobs report.

Reasons?

1. Initial estimate on second quarter GDP was much weaker than expected.
2. Economic weakness abroad: Last week, Australia's central bank lowered its benchmark rate to a record-low, while in the UK, Mark Carney and co. not only lowered their benchmark rate to a new record-low, they started a program of buying corporate debt to boot. 
3. Inflation is still tame.

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 September 21^ST, 2016 FOMC monetary policy meeting: 82% (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: 78.6% (somewhat 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: 52.4% (on the fence), with a 40% chance of a 25 basis point (0.25 percentage point) rate increase.
  
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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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