Prime Rate

also known as the Fed, National or United States Prime Rate,
from the interest-rate specialists at www.FedPrimeRate.comSM

Tuesday, January 31, 2017

Odds At 96% (Extremely Likely) The U.S. Prime Rate Will Remain At 3.75% After Tomorrow's Monetary Policy Meeting

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As of right now, the investors who trade in fed fund futures have odds at 96% (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 0.5% - 0.75% at tomorrow's monetary policy meeting (extremely likely.)

The current Prime Rate, which went into effect on December 15, 2016, is 3.75%.

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

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Looks like Wall Street's honeymoon with Donald Trump may be over, as waning technology stocks and various earnings misses conspired to clip the Dow Jones Industrial Average (DJIA), which closed at 19,864.09 today, 1.178% lower than its record-high close of 20,100.91, set on January 26, 2017.

The S + P 500 Index finished the day at 2,278.87, a 0.848% retreat from its record-high close of 2,298.37, set on January 25, 2017.


Let's hope our new president gets the message, and backs off from obviously overzealous attacks on legal immigration.

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Influencing the latest odds include readings on GDP, small-business optimism, inflation, retail sales, jobs, wages, consumer confidence, consumer sentiment, new home sales, existing home sales, housing starts, manufacturing, the services sector, and industrial production.

Stay tuned for tomorrow's FOMC decision on short-term rates...

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Current Odds

  • Current odds the U.S. Prime Rate will remain at the current 3.75% after tomorrow's monetary policy meeting: 96% (extremely likely), with remaining odds -- 4% (extremely unlikely) -- that the FOMC will opt to raise short-term rates by 25 basis points (0.25 percentage point.)

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  • Current odds the U.S. Prime Rate will remain at the current 3.75% after the March 15TH, 2017 FOMC monetary policy meeting: 79%  (somewhat likely), with remaining odds --  21% -- that short-term rates will be at least 25 basis points (0.25 percentage point) higher.

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  • Current odds the U.S. Prime Rate will remain at the current 3.75% after the May 3RD, 2017 FOMC monetary policy meeting: 62.1%  with remaining odds --  37.9% -- that short-term rates will be at least 25 basis points (0.25 percentage point) higher.


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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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