Odds Now At 90% (VERY LIKELY) The U.S. Prime Rate Will Remain at 8.50% After The July 31, 2024 FOMC Monetary Policy Meeting

Prime Rate Prediction

Prime Rate Forecast

As of right now, our odds are at 90% (very likely) 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 July 31^ST, 2024 monetary policy meeting, with the United States Prime Rate (a.k.a Fed Prime Rate) holding at 8.50%.

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Futures Market Has No Idea Where Where Short-Term Rates Will Be at The End of This Year
  

Current Interest-Rate-Futures Market Predictions for
the December 18, 2024 FOMC Policy Meeting

Nice △pyramid△ this 👆🔺👆 chart is, n'est-ce pas?

Right now, a 44% majority believe that the Fed will have cut rates by 50 basis points (0.50 percentage point) by the end of 2024.  If they're right, that would put the U.S. Prime Rate at an even 8.00% at year-end.

• From the May Jobs Report: Year-on-year (Y-O-Y), Average Weekly Earnings advanced by +4.08%, while the reading on Average Weekly Earnings was +3.78%
  
  
  • The U-3 (official) jobless rate edged higher, from 3.9% during April, to 4.0% during May, 2024.
  
  
• Y-O-Y, the Core CPI for May, 2024 came in at +3.42%.
   

Stay tuned...

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

=======

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 remain at 8.50% after the July 31^ST, 2024 FOMC monetary policy meeting: 90% (very likely.)
  

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Fourth FOMC Meeting of 2024 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 fourth monetary policy meeting of 2024 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 economic activity has continued to expand at a solid pace. Job gains have remained strong, and the unemployment rate has remained low. Inflation has eased over the past year but remains elevated. In recent months, there has been modest further progress toward the Committee's 2 percent inflation objective.

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. The Committee judges that the risks to achieving its employment and inflation goals have moved toward better balance over the past year. The economic outlook is uncertain, and the Committee remains highly attentive to inflation risks.

In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent. In considering any 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 does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. 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; Thomas I. Barkin; Michael S. Barr; Raphael W. Bostic; Michelle W. Bowman; Lisa D. Cook; Mary C. Daly; Philip N. Jefferson; Adriana D. Kugler; Loretta J. Mester; 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 90% (VERY LIKELY) The U.S. Prime Rate Will Remain at 8.50% After The June 12, 2024 FOMC Monetary Policy Meeting

Prime Rate Prediction

Prime Rate Forecast

As of right now, our odds are at 90% (very likely) 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 June 12^TH, 2024 monetary policy meeting, with the United States Prime Rate (a.k.a Fed Prime Rate) holding at 8.50%.

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Jobs + Wages Weakening: Exactly What The Fed Wants
  

• 
  The number of jobless people per job opening crept up during March, 2024 (graphic.)  A lagging indicator, but nevertheless: further proof that the Fed's mission of killing jobs, and keeping short-term interest rates elevated, to tame inflation, is working.

• From the April Jobs Report: A rare negative month-on-month reading for Average Weekly Earnings (-0.09%.)

Stay tuned...

=======

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

=======

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

======= 

Current Odds

• Current odds the U.S. Prime Rate will remain at 8.50% after the June 12^TH, 2024 FOMC monetary policy meeting: 90% (very likely.)
  

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Third FOMC Meeting of 2024 Adjourned: United States Prime Rate Continues at 8.50%

United States Prime Rate

The Federal Open Market Committee (FOMC) of the Federal Reserve System has just adjourned its third monetary policy meeting of 2024 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 economic activity has continued to expand at a solid pace. Job gains have remained strong, and the unemployment rate has remained low. Inflation has eased over the past year but remains elevated. In recent months, there has been a lack of further progress toward the Committee's 2% inflation objective.

The Committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run. The Committee judges that the risks to achieving its employment and inflation goals have moved toward better balance over the past year. The economic outlook is uncertain, and the Committee remains highly attentive to inflation risks.

In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 5-1/4% to 5-1/2%. In considering any 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 does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%.

In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. Beginning in June, the Committee will slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $60 billion to $25 billion. The Committee will maintain the monthly redemption cap on agency debt and agency mortgage‑backed securities at $35 billion and will reinvest any principal payments in excess of this cap into Treasury securities. The Committee is strongly committed to returning inflation to its 2% 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; Thomas I. Barkin; Michael S. Barr; Raphael W. Bostic; Michelle W. Bowman; Lisa D. Cook; Mary C. Daly; Philip N. Jefferson; Adriana D. Kugler; Loretta J. Mester; 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 95% (VERY LIKELY) The U.S. Prime Rate Will Remain at 8.50% After The May 1, 2024 FOMC Monetary Policy Meeting

Prime Rate Prediction

Prime Rate Forecast

As of right now, our odds are at 95% (very likely) 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 May 1^ST, 2024 monetary policy meeting, with the United States Prime Rate (a.k.a Fed Prime Rate) holding at 8.50%.

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Latest on Disinflation
 

• Year-on-year (Y-O-Y), the Core Consumer Price Index (CPI) slipped from 3.86% during January, to 3.75% during February, 2024. Good disinflation news...but not great.

• Y-O-Y, The Core PCE Price Index moved sideways, remaining at 2.8% from January to February of this year. With food + energy added to the mix, the PCE Price Index edged in the wrong direction: up, from 2.4% to 2.5%.

Wages

• Y-O-Y, average hourly + average weekly earnings advanced in sync, both by 4.14%, according to last Friday's Employment Situation Report for March, 2024.

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And so, based on these and other economic data, the Fed is likely to do nothing with the benchmark fed funds target rate on May 1^ST, 2024, which would mean Prime staying where it is until the following meeting and decision on short-term rates (June 12, 2024.)

Stay tuned...

=======

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

=======

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

======= 

Current Odds

• Current odds the U.S. Prime Rate will remain at 8.50% after the May 1^ST, 2024 FOMC monetary policy meeting: 95% (very likely.)
  

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Second FOMC Meeting of 2024 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 second monetary policy meeting of 2024 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 economic activity has been expanding at a solid pace. Job gains have remained strong, and the unemployment rate has remained low. Inflation has eased over the past year but remains elevated.

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. The Committee judges that the risks to achieving its employment and inflation goals are moving into better balance. The economic outlook is uncertain, and the Committee remains highly attentive to inflation risks.

In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent. In considering any 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 does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent. 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; Thomas I. Barkin; Michael S. Barr; Raphael W. Bostic; Michelle W. Bowman; Lisa D. Cook; Mary C. Daly; Philip N. Jefferson; Adriana D. Kugler; Loretta J. Mester; 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 90% (Very Likely) The U.S. Prime Rate Will Continue At 8.50% After The March 20, 2024 FOMC Monetary Policy Meeting

Prime Rate Prediction

Prime Rate Forecast

As of right now, our odds are at 90% (very likely) 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 March 20^TH, 2024 monetary policy meeting, with the United States Prime Rate (a.k.a Fed Prime Rate) holding at 8.50%.

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The U.S. economy remains strong, despite the relatively high cost of borrowing. Both short- and long-term interest rates are restrictive right now, and have been for some time. This interest-rate environment should have helped to cool the American consumer down, but so far, that hasn't happened.

The economy grew at a healthy 3.3% during Q4, 2023, while the unemployment rate held steady at 3.7% last month, with an estimated 353,000 non-farm jobs added to the American workforce.

So, at this point, it's unlikely the Fed will lower the benchmark fed funds target rate on March 20^TH, as many were hoping might happen.

Stay tuned...

=======

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

=======

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

======= 

Current Odds

• Current odds the U.S. Prime Rate will continue at 8.50% after the March 20^TH, 2024 FOMC monetary policy meeting: 90% (very likely.)
  

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First FOMC Meeting of 2024 Adjourned: United States Prime Rate Continues at 8.50%

United States Prime Rate

The Federal Open Market Committee (FOMC) of the Federal Reserve System has just adjourned its first monetary policy meeting of 2024 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 economic activity has been expanding at a solid pace. Job gains have moderated since early last year but remain strong, and the unemployment rate has remained low. Inflation has eased over the past year but remains elevated.

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. The Committee judges that the risks to achieving its employment and inflation goals are moving into better balance. The economic outlook is uncertain, and the Committee remains highly attentive to inflation risks.

In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent. In considering any 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 does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent. 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; Thomas I. Barkin; Michael S. Barr; Raphael W. Bostic; Michelle W. Bowman; Lisa D. Cook; Mary C. Daly; Philip N. Jefferson; Adriana D. Kugler; Loretta J. Mester; 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 90% (Very Likely) The U.S. Prime Rate Will Continue At 8.50% After The January 31, 2024 FOMC Monetary Policy Meeting

Prime Rate Prediction

Prime Rate Forecast

As of right now, our odds are at 90% (very likely) 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 January 31^ST, 2024 monetary policy meeting, with the United States Prime Rate (a.k.a Fed Prime Rate) remaining at 8.50%.

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Year-on-Year (Y-o-Y), the Core PCE, the Fed's preferred inflation gauge, fell from 3.4% during October 2023, to 3.2% during November, 2023.  It was 4.8% back in November of 2022.

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Right now, we have odds at 65% (on the fence) the Fed will cut short-term rates, including the U.S. Prime Rate, by 25 basis points (0.25 percentage point) at the March 20, 2024 FOMC meeting. 

Stay tuned...

=======

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

=======

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

======= 

Current Odds

• Current odds the U.S. Prime Rate will continue at 8.50% after the January 31^ST, 2024 FOMC monetary policy meeting: 90% (very likely.)
  

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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.

=======

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

======= 

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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Seventh FOMC Meeting of 2023 Adjourned: United States Prime Rate Continues at 8.50%

United States Prime Rate

The Federal Open Market Committee (FOMC) of the Federal Reserve System has just adjourned its seventh 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 economic activity expanded at a 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 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 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 90% (Likely) The U.S. Prime Rate Will Hold At 8.50% After The November 1, 2023 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) will vote to keep the benchmark target range for the fed funds rate at  5.25% - 5.50% at the November 1^ST, 2023 monetary policy meeting, with the United States Prime Rate (a.k.a Fed Prime Rate) holding at 8.50%.

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Continued Softening In The Job Market:
The Fed Likes To See This

 

From the August, 2023 Job Openings and Labor Turnover report:

• Year-on-Year (Y-o-Y), job openings are down by 588,000, or -5.77%.
  
  
• Y-o-Y, hires are down by 621,000, or -9.59%.

Meanwhile, Y-o-Y, the closely watched Core PCE fell from 4.3% in July, to 3.9% during August, 2023.  It was 4.9% back in August of 2022.

 

The taming of inflation continues, as does the culling jobs. Stay tuned...

 

=======

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

=======

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

======= 

Current Odds

• Current odds the U.S. Prime Rate will continue at 8.50% after the November 1^ST, 2023 FOMC monetary policy meeting: 90% (likely.)
  

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Sixth 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 sixth 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) remains 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 economic activity has been expanding at a solid pace. Job gains have slowed in recent months but remain strong, 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 5-1/4 to 5-1/2 percent. The Committee will continue to assess additional information and its implications for monetary policy. In determining the extent of 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 80% (Likely) The U.S. Prime Rate Will Hold At 8.50% After The September 20, 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 keep the benchmark target range for the fed funds rate at  5.25% - 5.50% at the September 20^TH, 2023 monetary policy meeting, with the United States Prime Rate (a.k.a Fed Prime Rate) holding at 8.50%.

 =======

The Disinflation Continues

 

Year-on-year, the closely watched Core PCE fell from 4.6% in May, to 4.1% during June, 2023.  It was 4.8% back in June of 2022.

Clear progress has been made on the quest for that 2% Fed comfort zone, but since the current cycle of rate hikes, which began back in March of last year, has been aggressive, a pause is likely, as the Fed doesn't want to risk causing a deep and painful recession.

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 September 20^TH, 2023 FOMC monetary policy meeting: 80% (likely.)
  

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