United States Prime Rate: Odds At 69.0% (Somewhat Likely) The U.S. Prime Rate Will Rise To 4.75% After The March 21, 2018 FOMC Monetary Policy Meeting

Prime Rate Forecast

Prime Rate Forecast

As of right now, odds are at 69.0% that the Federal Open Market Committee (FOMC) will vote to raise the target range for the benchmark fed funds rate from 1.25% - 1.50% to 1.50% - 1.75% at the March 21^ST, 2018 monetary policy meeting (somewhat likely.)

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The current Prime Rate, which went into effect on December 14^TH, 2017 is 4.50%.

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

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Average hourly earnings rose by 2.8857% year-on-year, according to the January jobs report, which has many thinking that healthy wage inflation has finally kicked in. But, Y/Y, average weekly earnings rose by 2.586%, which is in line with the 2.6% Y/Y figure reported in the Employment Cost Index for Q4 2017.
The Dow Jones Industrial Average (DJIA) lost 1,175.21 points today (-4.605%) and closed at 24,345.75, as investors worried about the business cycle and inflation.

Since closing at a record high on January 26, 2018 -- 26,616.71 -- the DJIA has declined 8.532%.

The broader S and P 500 Index has given up 7.795% since the January 26 record close, while the NASDAQ Composite slid 7.171%.

The yield on the 10-Year Treasury Note ended the day at 2.77%.

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The latest Core PCE Price Index reading: a very tepid 1.5% Y/Y increase for December 2017.

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Responding To Widespread Consumer Abuses And Compliance Breakdowns By Wells Fargo, Federal Reserve Restricts Wells' Growth Until Firm Improves Governance And Controls. Concurrent With Fed Action, Wells To Replace Three Directors By April, One By Year End

From Friday's Federal Reserve press release:

"...Responding to recent and widespread consumer abuses and other compliance breakdowns by Wells Fargo, the Federal Reserve Board on Friday announced that it would restrict the growth of the firm until it sufficiently improves its governance and controls. Concurrently with the Board's action, Wells Fargo will replace three current board members by April and a fourth board member by the end of the year.

In addition to the growth restriction, the Board's consent cease and desist order with Wells Fargo requires the firm to improve its governance and risk management processes, including strengthening the effectiveness of oversight by its board of directors. Until the firm makes sufficient improvements, it will be restricted from growing any larger than its total asset size as of the end of 2017. The Board required each current director to sign the cease and desist order.

'We cannot tolerate pervasive and persistent misconduct at any bank and the consumers harmed by Wells Fargo expect that robust and comprehensive reforms will be put in place to make certain that the abuses do not occur again,' Chair Janet L. Yellen said. 'The enforcement action we are taking today will ensure that Wells Fargo will not expand until it is able to do so safely and with the protections needed to manage all of its risks and protect its customers.'

In recent years, Wells Fargo pursued a business strategy that prioritized its overall growth without ensuring appropriate management of all key risks. The firm did not have an effective firm-wide risk management framework in place that covered all key risks. This prevented the proper escalation of serious compliance breakdowns to the board of directors.

The Board's action will restrict Wells Fargo's growth until its governance and risk management sufficiently improves but will not require the firm to cease current activities, including accepting customer deposits or making consumer loans.

Emphasizing the need for improved director oversight of the firm, the Board has sent letters to each current Wells Fargo board member confirming that the firm's board of directors, during the period of compliance breakdowns, did not meet supervisory expectations. Letters were also sent to former Chairman and Chief Executive Officer John Stumpf and past lead independent director Stephen Sanger stating that their performance in those roles, in particular, did not meet the Federal Reserve's expectations..."

Document 1 (PDF)
Document 2 (PDF)
Document 3 (PDF)

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Stay tuned for the latest odds...

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Current Odds

Current odds the U.S. Prime Rate will rise to 4.75% after the March 21^ST, 2018 FOMC monetary policy meeting: 69.0%, with 31.0% odds the U.S. Prime Rate will continue at 4.50%.

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