Prime Rate

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

Sunday, May 14, 2017

Odds At 73.8% (Somewhat Likely) The U.S. Prime Rate Will Rise To 4.25% After The June 14 FOMC Monetary Policy Meeting

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Latest Prime Rate Forecast

As of right now, the investors who trade in fed fund futures have odds at 73.8% (as implied by current pricing on contracts) that the Federal Open Market Committee (FOMC) will vote to raise the target range for the benchmark fed funds rate to 0.1% - 1.25%, at the June 14 monetary policy meeting (somewhat likely.)

The current Prime Rate, which went into effect on March 16, 2017, is 4.00%.

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

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Non-Accelerating Inflation Rate of Unemployment (NAIRU): a level of unemployment below which inflation rises.

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This post-Great-Recession American economy continues to languish, despite strong reports on jobs.  Sluggish wage growth, tepid inflation, depressed productivity and continued weakness in GDP.

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Current Odds

  • Current odds the U.S. Prime Rate will rise to 4.25% after the June 14TH, 2017 FOMC monetary policy meeting: 73.8%  (somewhat likely), with remaining odds --  26.2% (not likely) -- that the U.S. Prime Rate will continue at 4.00%.

  • Current odds the U.S. Prime Rate will continue at 4.00% after the July 26TH, 2017 FOMC monetary policy meeting: 23.9%  (not likely), with remaining odds --  76.1% (somewhat likely) -- that the U.S. Prime Rate will be at least 25 basis points (0.25 percentage point) higher.

  • Current odds the U.S. Prime Rate will continue at 4.00% after the September 20TH, 2017 FOMC monetary policy meeting: 17.4%  (not likely), with remaining odds --  82.6% (likely) -- that the U.S. Prime Rate 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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