Odds At 95.4% (Extremely Likely) The U.S. Prime Rate Will Rise To 3.75% At Tomorrow's FOMC Monetary Policy Meeting

Prime Rate Forecast

Latest Prime Rate Forecast

As of right now, the investors who trade in fed fund futures have odds at 95.4% (as implied by current pricing on contracts) that the Federal Open Market Committee (FOMC) will vote raise the target range for the benchmark fed funds rate by 25 basis points (0.25 percentage point), to 0.5% - 0.75%, at tomorrow's monetary policy meeting (extremely likely.)

The current United States Prime Rate, which went into effect on December 17, 2015, is 3.5%.  A 25 basis point rate hike tomorrow would cause the U.S. Prime Rate to rise to 3.75%.

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

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The 3 major stock-market indices closed with record highs again today, with the Dow Jones Industrial Average (DJIA) creeping closer to 20,000.

• The DJIA gained 114.78 points (0.58%) to close at 19,911.21 (CHART)
• The broader S and P 500 Index added 14.76 points (0.654%) to close at 2,271.72 (CHART)
• The NASDAQ Composite advanced by 51.29 points (0.948%) to close at 5,463.83 (CHART)

Stay tuned for tomorrow press release from The Fed, and reports on retail sales and industrial production.

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Current Odds

• Current odds the U.S. Prime Rate will rise to 3.75% at tomorrow's FOMC monetary policy meeting: 95.4% (extremely likely), with remaining odds -- 4.6% (very unlikely) -- that short-term rates, including the U.S. Prime Rate, will remain at current levels.
  
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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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