Prime Rate

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

Tuesday, May 02, 2017

Odds At 95.2% (Very Likely) The U.S. Prime Rate Will Continue At 4.00% After Tomorrow's 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 95.2% (as implied by current pricing on contracts) that the Federal Open Market Committee (FOMC) will vote to leave the target range for the benchmark fed funds rate at 0.75% - 1.00% at tomorrow's monetary policy meeting (very 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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Recent economic data influencing the latest odds include:

  • Inflation: During March 2017, and year-on-year, the PCE Price Index slipped from 2.1% to 1.8%, while the Core PCE Price Index slowed from 1.8% to 1.6%.  Consumer spending moved sideways for two consecutive months.


    • For March 2017, and year-over-year, the Consumer Price Index (CPI) moved from 2.7% to 2.4%, while the Core CPI dipped from 2.2% to 2.0%.

  • The first estimate of Real GDP for the first quarter of 2017 was reported at an anemic 0.7%.

  • The ISM® Manufacturing Index (ISM) declined, month-on-month, from 57.2% to 54.8% for April 2017.

  • For the past 2 weeks, the week-ending price on a barrel of crude oil for future delivery has hovered below the $50-per-barrel mark @ NYMEX WTI.  The last time the week-ending close was above $55 per barrel was July 3, 2015.

  • For March 2017, the year-on-year change for retail sales retreated from 5.7% to 5.2%.

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Current Odds

  • Current odds the U.S. Prime Rate will continue at 4.00% after tomorrow's FOMC monetary policy meeting: 95.2%  (very likely), with remaining odds --  4.8% (very unlikely) -- that the U.S. Prime Rate will rise to 4.25%.

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  • Current odds the U.S. Prime Rate will continue at 4.00% after the June 14TH, 2017 FOMC monetary policy meeting: 29.3%  (not likely), with remaining odds --  70.7% (somewhat likely) -- that the U.S. Prime Rate will be at least 25 basis points (0.25 percentage point) higher.


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  • Current odds the U.S. Prime Rate will continue at 4.00% after the July 26TH, 2017 FOMC monetary policy meeting: 26.4%  (not likely), with remaining odds --  73.6% (somewhat likely) -- that the U.S. Prime Rate will be at least 25 basis points (0.25 percentage point) higher.

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  • Current odds the U.S. Prime Rate will continue at 4.00% after the September 20TH, 2017 FOMC monetary policy meeting: 17.7%  (not likely), with remaining odds --  82.3% (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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