Odds At 73.8% (Somewhat Likely) The U.S. Prime Rate Will Rise To 4.25% After The June 14 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 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 1.00% - 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 14^TH, 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 26^TH, 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 20^TH, 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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• 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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