Prime Rate

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

Tuesday, July 25, 2017

Odds At 96.9% (Very Likely) The U.S. Prime Rate Will Continue At 4.25% After Tomorrow's FOMC Monetary Policy Meeting

Prime Rate Forecast
Prime Rate Forecast
Prime Rate Forecast

As of right now, odds are at 96.9%  that the Federal Open Market Committee (FOMC) will vote to leave the target range for the benchmark fed funds rate at 1.00% - 1.25% after tomorrow's monetary policy meeting (very likely.)

The current Prime Rate, which went into effect on June 15, 2017, is 4.25%.

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

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OK, so here's the weakness, that virtually guarantees the Fed will leave short-term rates alone tomorrow:

  • U.S. Gross Domestic Product, the final estimate for the first quarter of 2017, came in at 1.4%.
  • Average Hourly Earnings rose by 0.1526% in June, while the year-on-year increase was 2.5%.

  • Disinflation: from April to May, the year-on-year PCE Price Index slipped from 1.7% to 1.4%, while the year-on-year Core PCE Price Index slid from 1.5% to 1.4%.
  • Disinflation: From May to June, the year-on-year Consumer Price Index moved from 1.9% to 1.6%.
     
  • Between February and June of this year, gains in year-on-year Retail Sales have declined in the following order:  5.7% to 5.2% to 4.5% to 3.8% to 2.8%.
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Current Odds

  • Current odds the U.S. Prime Rate will continue at 4.25% after tomorrow's FOMC monetary policy meeting: 96.9%  (very likely), with 3.1% odds (very unlikely) the U.S. Prime Rate will rise to 4.5%.

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  • Current odds the U.S. Prime Rate will continue at 4.25% after the September 20TH, 2017 FOMC monetary policy meeting: 91.6%  (likely), with remaining odds --  8.4% (unlikely) -- 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 4.25% after the November 1ST, 2017 FOMC monetary policy meeting: 89.8%  (likely), with remaining odds --  10.2% (unlikely) -- 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 4.25% after the December 13TH, 2017 FOMC monetary policy meeting: 48%  (on the fence), with remaining odds --  52% (on the fence) -- 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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