Prime Rate Forecast: June 2025

Saturday, June 28, 2025

Odds Now At 90% (Likely) The U.S. Prime Rate Will Continue at 7.50% After the July 30, 2025 FOMC Monetary Policy Meeting

Prime Rate Prediction

Prime Rate Forecast

As of right now, our odds are at 90% (likely) the Federal Open Market Committee (FOMC) of the Federal Reserve will vote to leave the benchmark target range for the fed funds rate (TRFFR) at 4.25% - 4.50% at the July 30^TH, 2025 monetary policy meeting, leaving the U.S. Prime Rate at the current 7.50%.

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The Data

According to revised government estimates, the American economy shrank by 0.5% during the first quarter of 2025.
Year-on-year (y-o-y), the Core PCE Price Index, the Fed's preferred inflation gauge, came in at 2.7% for May, 2025.

The previous y-o-y reading (April, 2025) was revised up, from 2.5% to 2.6%.
Despite the threat of stagflation, equities finished the first week of summer 2025 with gains. Both the S&P 500 and NASDAQ Composite indexes closed at all-time highs.

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Stay tuned...

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The United States Prime Rate was lowered to the current 7.50% on December 18, 2024.

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SUMMARY

Current odds the U.S. Prime Rate will continue at the current 7.50% after the July 30^TH, 2025 FOMC monetary policy meeting: 90% (likely.)

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Labels: banking, banks, disinflation, fed_funds_target_rate, Fed_Prime_Rate, FedPrimeRate, FedPrimeRate.com, inflation, money, prime_rate, prime_rate_forecast, prime_rate_prediction, tariff_war, tariffs, Trade, Trade_Policy, Trump_Tariffs

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Wednesday, June 18, 2025

Fourth FOMC Monetary Policy Meeting of 2025 Adjourned: United States Prime Rate Continues At 7.50%

United States Prime Rate

The Federal Open Market Committee (FOMC) of the Federal Reserve System has just adjourned its fourth monetary policy meeting of 2025 and, in accordance with our latest forecast, has voted to leave the benchmark target range for the federal funds rate at 4.50% - 4.75% to 4.25% - 4.50%. Therefore, the United States Prime Rate (a.k.a the Fed Prime Rate) holds at 7.50%.

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):

"...Although swings in net exports have affected the data, recent indicators suggest that economic activity has continued to expand at a solid pace. The unemployment rate remains low, and labor market conditions remain solid. Inflation remains somewhat elevated.

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook has diminished but remains elevated. The Committee is attentive to the risks to both sides of its dual mandate.

In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 4-1/4 to 4-1/2 percent. In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. The Committee is strongly committed to supporting maximum employment and 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; Susan M. Collins; Lisa D. Cook; Austan D. Goolsbee; Philip N. Jefferson; Adriana D. Kugler; Alberto G. Musalem; Jeffrey R. Schmid; and Christopher J. Waller..."