Odds At 100% (Certain) The U.S. Prime Rate Will Rise To At Least 4.50% After Tomorrow's FOMC Monetary Policy Meeting

Prime Rate Forecast

Prime Rate Forecast

As of right now, odds are at 100%  that the Federal Open Market Committee (FOMC) will vote to raise the target range for the benchmark fed funds rate by at least 25 basis points (0.25 percentage point) at tomorrow's monetary policy meeting (certain.)

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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 tomorrow 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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Despite the Federal Reserve's preferred inflation measure continuing below the Fed's 2% target, and persistent and serious concerns about wage growth, the FOMC will raise short-term rates tomorrow.

A perfectly valid argument against a rate hike could be: why risk dampening an economic recovery that has taken an inordinate amount of time to gain real strength?  A flattening yield curve adds further support for this.

Stay tuned for tomorrow's FOMC decision and press release...

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Current Odds

• Current odds the U.S. Prime Rate will rise to 4.50% after tomorrow's FOMC monetary policy meeting: 87.6%  (likely), with 12.4% odds (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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