Odds At 91.5% (Very Likely) The U.S. Prime Rate Will Rise To 4.50% After The December 13, 2017 FOMC Monetary Policy Meeting

Prime Rate Forecast

Prime Rate Forecast

As of right now, odds are at 91.5%  that the Federal Open Market Committee (FOMC) will vote to raise the target range for the benchmark fed funds rate by 25 basis points (0.25 percentage point) to 1.25% - 1.50% at the December 13^TH, 2017 monetary policy meeting (very likely.)

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The current Prime Rate, which went into effect on June 15, 2017, is 4.25%.  A 25 basis point rate increase on December 13^TH, 2017 would cause the U.S. Prime Rate to rise to 4.50%.

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

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Economic data influencing the latest odds include readings on Gross Domestic Product, Inflation, Jobs, Productivity, Manufacturing, Non-Manufacturing (Services Sector), Consumer Confidence, Consumer Sentiment, Economic Activity, Small Business Optimism and Energy.

Stay tuned...

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Current Odds

• Current odds the U.S. Prime Rate will rise to 4.50% after the December 13^TH, 2017 FOMC monetary policy meeting: 91.5%  (very likely), with 8.5% odds (very unlikely) that the U.S. Prime Rate will rise to 4.75%.
  
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• NB: United States Prime Rate = (The Fed Funds Target Rate + 3)

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Donald Trump Nominates Jerome Powell To Be Next Fed Chair

Jerome Powell

Here's a clip from today's press release:

"...Thank you, Mr. President, for the faith you have shown in me through this nomination. I am both honored and humbled by this opportunity to serve our great country. If I am confirmed by the Senate, I will do everything within my power to achieve the goals assigned to the Federal Reserve by the Congress: stable prices and maximum employment.

I want to thank my wife, Elissa, for her love, support, and wise counsel. Without her, I would not be standing here. We are thinking today of our three children, and of the world they are inheriting. My five siblings and I are also thinking today of our parents, who gave us so many gifts, most of all a loving home.

In the years since the global financial crisis ended, our economy has made substantial progress toward full recovery. By many measures we are close to full employment, and inflation has gradually moved up toward our target.

Our financial system is without doubt far stronger and more resilient than it was before the crisis. Our banks have much higher capital and liquidity, are more aware of the risks they run, and are better able to manage those risks. While post-crisis improvements in regulation and supervision have helped us to achieve these gains, I will continue to work with my colleagues to ensure that the Federal Reserve remains vigilant and prepared to respond to changes in markets and evolving risks.

Finally, I have had the great privilege of serving under Chairman Bernanke and Chair Yellen, who guided the economy with insight and courage through difficult times while moving monetary policy toward greater transparency and predictability. Each of them embodies the highest ideals of public service--unquestioned integrity and unflinching commitment to fulfilling our mandate. Inside the Federal Reserve, we understand that monetary policy decisions matter for American families and communities. I strongly share that sense of mission and am committed to making decisions with objectivity and based on the best available evidence, in the longstanding tradition of monetary policy independence.

Mr. President, thank you again for this extraordinary opportunity to serve the American people..."

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Seventh FOMC Meeting of 2017 Adjourned: U.S. Prime Rate Holds At 4.25%

U.S. Prime Rate

The Federal Open Market Committee (FOMC) of the Federal Reserve has just adjourned its seventh monetary policy meeting of 2017 and, in accordance with our forecast, has voted to leave the benchmark target range for the federal funds rate at 1.00% - 1.25%. Therefore, the United States Prime Rate (a.k.a the Fed Prime Rate) will continue at the current 4.25%.

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

Here's a clip from today's FOMC press release (note text in bold):

"...Information received since the Federal Open Market Committee met in September indicates that the labor market has continued to strengthen and that economic activity has been rising at a solid rate despite hurricane-related disruptions. Although the hurricanes caused a drop in payroll employment in September, the unemployment rate declined further. Household spending has been expanding at a moderate rate, and growth in business fixed investment has picked up in recent quarters. Gasoline prices rose in the aftermath of the hurricanes, boosting overall inflation in September; however, inflation for items other than food and energy remained soft. On a 12-month basis, both inflation measures have declined this year and are running below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. Hurricane-related disruptions and rebuilding will continue to affect economic activity, employment, and inflation in the near term, but past experience suggests that the storms are unlikely to materially alter the course of the national economy over the medium term. Consequently, the Committee continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, and labor market conditions will strengthen somewhat further. Inflation on a 12-month basis is expected to remain somewhat below 2 percent in the near term but to stabilize around the Committee's 2 percent objective over the medium term. Near-term risks to the economic outlook appear roughly balanced, but the Committee is monitoring inflation developments closely.

In view of realized and expected labor market conditions and inflation, the Committee decided to maintain the target range for the federal funds rate at 1 to 1-1/4 percent. The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a sustained return to 2 percent inflation.

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. The Committee will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.

The balance sheet normalization program initiated in October 2017 is proceeding.

Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; Charles L. Evans; Patrick Harker; Robert S. Kaplan; Neel Kashkari; Jerome H. Powell; and Randal K. Quarles..."

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