United States Prime Rate

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

Friday, June 12, 2020

Odds At 100% (Certain) The United States Prime Rate Will Hold At 3.25% After The July 29, 2020 FOMC Monetary Policy Meeting

United States Prime Rate Forecast
Prime Rate Prediction
Prime Rate Forecast

As of right now, our odds are at 100% (certain) the Federal Open Market Committee (FOMC) will vote to leave the target range for the benchmark fed funds rate at the current 0.00% - 0.25% at the July 29TH, 2020 monetary policy meeting, and keep the United States Prime Rate (a.k.a Fed Prime Rate) at 3.25%.

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The current U.S. Prime Rate was lowered from 4.25% to the current 3.25% on March 15TH, 2020.

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The Labor Department reported that initial claims for unemployment benefits declined from 1,897,000 for the week that ended on May 30TH, to 1,542,000 for the week that ended on June 6TH.  Encouraging news for sure.

But the COVID-19 crisis is still very much with us. Yesterday, in the United States, there were 20,486 new cases, and 834 new deaths.

So the Fed isn't going to do anything with short-term rates any time soon, and is probably going to be on hold into 2022 (only two FOMC members see the Fed raising rates at some point during 2022; see dot plot below.)

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CHART: Initial Claims for Unemployment Insurance - June 6, 2020 Update
CHART: Initial Claims for Unemployment Insurance
June 6, 2020 Update
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CHART: FOMC Dot Plot - June 10, 2020
CHART: FOMC Dot Plot - June 10, 2020
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Coronavirus COVID-19 Reminder:

Symptoms of COVID-19, which may appear 2-14 days after exposure, include:
  • Fever
  • Cough
  • Shortness of breath
Emergency warning signs for COVID-19 include:
  • Difficulty breathing or shortness of breath
  • Persistent pain or pressure in the chest
  • New confusion or inability to arouse
  • Bluish lips or face

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Stay tuned for the latest odds, and for current U.S. economic data (inflation, jobs, economic growth, wages, etc.) 


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Current Odds

  • Current odds the United States Prime Rate will remain at the current 3.25% after the July 29TH, 2020 FOMC monetary policy meeting: 100% (certain.)

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Wednesday, June 10, 2020

Fifth FOMC Meeting of 2020 Adjourned: United States Prime Rate Remains At 3.25%

U.S. Prime Rate Remains at 3.25%
United States Prime Rate
The Federal Open Market Committee (FOMC) of the Federal Reserve System has just adjourned its fifth monetary policy meeting of 2020 and, in accordance with our latest forecast, has voted to maintain the benchmark target range for the federal funds rate at 0% - 0.25%. Therefore, the United States Prime Rate (a.k.a the Fed Prime Rate) remains at 3.25%.

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):


"...The Federal Reserve is committed to using its full range of tools to support the U.S. economy in this challenging time, thereby promoting its maximum employment and price stability goals.

The coronavirus outbreak is causing tremendous human and economic hardship across the United States and around the world. The virus and the measures taken to protect public health have induced sharp declines in economic activity and a surge in job losses. Weaker demand and significantly lower oil prices are holding down consumer price inflation. Financial conditions have improved, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses.

The ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term. In light of these developments, the Committee decided to maintain the target range for the federal funds rate at 0 to 1/4 percent. The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.

The Committee will continue to monitor the implications of incoming information for the economic outlook, including information related to public health, as well as global developments and muted inflation pressures, and will use its tools and act as appropriate to support the economy. In determining the timing and size of future adjustments to the stance of monetary policy, the Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective. 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.

To support the flow of credit to households and businesses, over coming months the Federal Reserve will increase its holdings of Treasury securities and agency residential and commercial mortgage-backed securities at least at the current pace to sustain smooth market functioning, thereby fostering effective transmission of monetary policy to broader financial conditions. In addition, the Open Market Desk will continue to offer large-scale overnight and term repurchase agreement operations. The Committee will closely monitor developments and is prepared to adjust its plans as appropriate.

Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michelle W. Bowman; Lael Brainard; Richard H. Clarida; Patrick Harker; Robert S. Kaplan; Neel Kashkari; Loretta J. Mester; and Randal K. Quarles..."

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