Prime Rate

also known as the Fed, National or United States Prime Rate,
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Thursday, September 22, 2016

Odds At 87.6% (Likely) The U.S. Prime Rate Will Continue At 3.5% After The November 2, 2016 FOMC Monetary Policy Meeting

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As of right now, the investors who trade in fed fund futures via the CME Group have odds at 87.6% (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 November 2ND, 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 betting the Fed will skip November for a rate increase, and perhaps raise short-term rates at the December 14TH monetary policy meeting, if economic data justify and hike.

If the November 2ND meeting included a press conference, then the odds on a rate hike for that meeting would be higher...But it doesn't.

Does the November election have anything to do with the Fed waiting?  No.  The Fed has changed rates with an impending presidential election before, and there is no reason why they wouldn't do so again.

Today's economic reports included readings on jobs, housing, and The Conference Board's Leading Economic Index®.  Stay tuned...

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Current Odds
  • Current odds the Prime Rate will continue at 3.5% after the November 2ND, 2016 FOMC monetary policy meeting: 87.6% (likely) with 12.4% odds on a 25 basis point (0.25 percentage point) rate increase.

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  • Current odds the Prime Rate will continue at 3.5% after the December 14TH, 2016 FOMC monetary policy meeting: 41.6% (somewhat unlikely), with remaining odds for a 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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