Odds Now At 80% (Likely) The U.S. Prime Rate Will Rise to 8.50% After The July 26, 2023 FOMC Monetary Policy Meeting

Prime Rate Prediction

Prime Rate Forecast

As of right now, our odds are at 80% (likely) the Federal Open Market Committee (FOMC) will vote to raise the benchmark target range for the fed funds rate to  5.25% - 5.50% at the July 26^TH, 2023 monetary policy meeting, with the United States Prime Rate (a.k.a Fed Prime Rate) rising to 8.50%.

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Very Welcome Disinflation!

 

Last week, America got much needed good news on prices, in the form of the May 2023 Import / Export Price Indexes. Year-on-year, import prices declined by 5.9%, while export prices eased by 10.1%.

 

But at 4.7%, the latest reading on the Fed's preferred inflation gauge -- the Core PCE -- was still uncomfortably above the central bank's 2% target.  So the Fed is probably going to nudge short-term rates up by 25 basis points (0.25 percentage point) next month.

Stay tuned...

 

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The United States Prime Rate was raised to the current 8.25% on May 3, 2023.

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

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Current Odds

• Current odds the U.S. Prime Rate will rise to 8.50% after the July 26^TH, 2023 FOMC monetary policy meeting: 80% (likely.)
  

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Fourth FOMC Meeting of 2023 Adjourned: United States Prime Rate Holds at 8.25%

United States Prime Rate

The Federal Open Market Committee (FOMC) of the Federal Reserve System has just adjourned its fourth monetary policy meeting of 2023 and, in accordance with our latest forecast, has voted to keep the benchmark target range for the federal funds rate at 5.00% - 5.25%. Therefore, the United States Prime Rate (a.k.a the Fed Prime Rate) remains at 8.25%.

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):

"...Recent indicators suggest that economic activity has continued to expand at a modest pace. Job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated.

The U.S. banking system is sound and resilient. Tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain. The Committee remains highly attentive to inflation risks.

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to maintain the target range for the federal funds rate at 5 to 5-1/4 percent. Holding the target range steady at this meeting allows the Committee to assess additional information and its implications for monetary policy. In determining the extent of additional policy firming that may be appropriate to return inflation to 2 percent over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans. The Committee is strongly committed to returning inflation to its 2 percent objective.

In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.

Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Lisa D. Cook; Austan D. Goolsbee; Patrick Harker; Philip N. Jefferson; Neel Kashkari; Lorie K. Logan; and Christopher J. Waller..."

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