Eighth and Final FOMC Meeting of 2023 Adjourned: United States Prime Rate Holds at 8.50%

United States Prime Rate

The Federal Open Market Committee (FOMC) of the Federal Reserve System has just adjourned its eighth and final 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 5.25% - 5.50%. Therefore, the United States Prime Rate (a.k.a the Fed Prime Rate) continues at 8.50%.

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 growth of economic activity has slowed from its strong pace in the third quarter. Job gains have moderated since earlier in the year but remain strong, and the unemployment rate has remained low. Inflation has eased over the past year but remains elevated.

The U.S. banking system is sound and resilient. Tighter financial and 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 5-1/4 to 5-1/2 percent.

The Committee will continue to assess additional information and its implications for monetary policy. In determining the extent of any 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; Adriana D. Kugler; Lorie K. Logan; and Christopher J. Waller..."

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 The United States Prime Rate was raised to the current 8.50% on July 26, 2023.

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Odds Now At 100% (Certain) The U.S. Prime Rate Will Continue At 8.50% After The December 13, 2023 FOMC Monetary Policy Meeting

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 keep the benchmark target range for the fed funds rate at  5.25% - 5.50% at the December 13^TH, 2023 monetary policy meeting, with the United States Prime Rate (a.k.a Fed Prime Rate) holding at 8.50%.

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If The Disinflation Continues,
The Fed May Be Done with Rate Hikes:

 

• Year-on-Year (Y-o-Y), The October, 2023 The Core Consumer Prices Index (CPI) came in at +4.031%.  It was 6.28% back in October of 2022.
  
  
• Y-o-Y, The October, 2023 Core Producer Prices Index (PPI) came in at +2.9%.
  
  
• Y-o-Y, the Core PCE fell from 3.7% during September, to 3.5% during October, 2023.  It was 5.33% back in October of 2022.
  
  

Rate hikes have been aggressive since May of 2022, so remaining on hold is the right thing to do. The last thing the Fed wants to do is drag the economy down into a deep recession.  A soft landing remains the target.

 

Stay tuned...

 

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The United States Prime Rate was raised to the current 8.50% on July 26, 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 continue at 8.50% after the December 13^TH, 2023 FOMC monetary policy meeting: 100% (certain.)
  

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