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

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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• The median price for a used home cruised to a new, all-time record high in June: $263,800.  Thumbs up.
  
• Both June Housing Starts and Building Permits advanced on both the month and the year. Happiness and cheer. 

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 20^TH, 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 1^ST, 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 13^TH, 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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• 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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