Seventh FOMC Meeting of 2018 Adjourned: United States Prime Rate Continues At 5.25%

U.S. Prime Rate

The Federal Open Market Committee (FOMC) of the Federal Reserve System has just adjourned its seventh monetary policy meeting of 2018 and, in accordance with our latest forecast, has voted to leave the benchmark target range for the federal funds rate at 2.00% - 2.25%. Therefore, the United States Prime Rate (a.k.a the Fed Prime Rate) will continue at the current 5.25%.

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):

"...Information received since the Federal Open Market Committee met in September indicates that the labor market has continued to strengthen and that economic activity has been rising at a strong rate. Job gains have been strong, on average, in recent months, and the unemployment rate has declined. Household spending has continued to grow strongly, while growth of business fixed investment has moderated from its rapid pace earlier in the year. On a 12-month basis, both overall inflation and inflation for items other than food and energy remain near 2 percent. Indicators of longer-term inflation expectations are little changed, on balance.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee's symmetric 2 percent objective over the medium term. Risks to the economic outlook appear roughly balanced.

In view of realized and expected labor market conditions and inflation, the Committee decided to maintain the target range for the federal funds rate at 2 to 2-1/4 percent.

In determining the timing and size of future adjustments to the target range for the federal funds rate, 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.

Voting for the FOMC monetary policy action were: Jerome H. Powell, Chairman; John C. Williams, Vice Chairman; Thomas I. Barkin; Raphael W. Bostic; Lael Brainard; Richard H. Clarida; Mary C. Daly; Loretta J. Mester; and Randal K. Quarles..."

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Fifth FOMC Meeting of 2018 Adjourned: United States Prime Rate Continues At 5.00%

U.S. Prime Rate

The Federal Open Market Committee (FOMC) of the Federal Reserve System has just adjourned its fifth monetary policy meeting of 2018 and, in accordance with our latest forecast, has voted to leave the benchmark target range for the federal funds rate at 1.75% - 2.00%. Therefore, the United States Prime Rate (a.k.a the Fed Prime Rate) will continue at the current 5.00%.

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):

"...Information received since the Federal Open Market Committee met in June indicates that the labor market has continued to strengthen and that economic activity has been rising at a strong rate. Job gains have been strong, on average, in recent months, and the unemployment rate has stayed low. Household spending and business fixed investment have grown strongly. On a 12-month basis, both overall inflation and inflation for items other than food and energy remain near 2 percent. Indicators of longer-term inflation expectations are little changed, on balance.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee's symmetric 2 percent objective over the medium term. Risks to the economic outlook appear roughly balanced.

In view of realized and expected labor market conditions and inflation, the Committee decided to maintain the target range for the federal funds rate at 1-3/4 to 2 percent. The stance of monetary policy remains accommodative, thereby supporting strong labor market conditions and a sustained return to 2 percent inflation.

In determining the timing and size of future adjustments to the target range for the federal funds rate, 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.

Voting for the FOMC monetary policy action were: Jerome H. Powell, Chairman; John C. Williams, Vice Chairman; Thomas I. Barkin; Raphael W. Bostic; Lael Brainard; Esther L. George; Loretta J. Mester; and Randal K. Quarles..."

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Third FOMC Meeting of 2018 Adjourned: United States Prime Rate Continues At 4.75%

U.S. Prime Rate

The Federal Open Market Committee (FOMC) of the Federal Reserve System has just adjourned its third monetary policy meeting of 2018 and, in accordance with our latest forecast, has voted to leave the benchmark target range for the federal funds rate at 1.50% - 1.75%. Therefore, the United States Prime Rate (a.k.a the Fed Prime Rate) will continue at the current 4.75%.

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):

"...Information received since the Federal Open Market Committee met in March indicates that the labor market has continued to strengthen and that economic activity has been rising at a moderate rate. Job gains have been strong, on average, in recent months, and the unemployment rate has stayed low. Recent data suggest that growth of household spending moderated from its strong fourth-quarter pace, while business fixed investment continued to grow strongly. On a 12-month basis, both overall inflation and inflation for items other than food and energy have moved close to 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with further gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace in the medium term and labor market conditions will remain strong. Inflation on a 12-month basis is expected to run near the Committee's symmetric 2 percent objective over the medium term. Risks to the economic outlook appear roughly balanced.

In view of realized and expected labor market conditions and inflation, the Committee decided to maintain the target range for the federal funds rate at 1-1/2 to 1-3/4 percent. The stance of monetary policy remains accommodative, thereby supporting strong labor market conditions and a sustained return to 2 percent inflation.

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation. 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. The Committee will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant further gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.

Voting for the FOMC monetary policy action were Jerome H. Powell, Chairman; William C. Dudley, Vice Chairman; Thomas I. Barkin; Raphael W. Bostic; Lael Brainard; Loretta J. Mester; Randal K. Quarles; and John C. Williams..."

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Odds At 98.4% (Very Likely) The United States Prime Rate Will Hold At 4.75% After The May 2, 2018 FOMC Monetary Policy Meeting

Prime Rate Forecast

Prime Rate Forecast

As of right now, odds are at 98.4% the Federal Open Market Committee (FOMC) will vote to leave the target range for the benchmark fed funds rate  at 1.50% - 1.75% at the May 2^ND, 2018 monetary policy meeting (very likely.)

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The current Prime Rate, which went into effect on March 21^ST, 2018, is 4.75%.

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

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On Friday, we learned that the U.S. economy added a yawning 103,000 jobs during March 2018, and:

• While the U-3 (headline) unemployment rate held steady at 4.1%, the U-6 rate improved from 8.2% during February, to 8.0% in March 2018.  U-6 was 8.8% during March 2017.
• Average hourly earnings rose by +0.3% month-to-month, and by +2.72% year-on-year.  Average weekly earnings advanced by +3.32% Y/Y.
• Month-to-month, the Civilian Labor Force Participation Rate edged lower, from 63.0% to 62.9%.

Year-on-year, the Core Personal Consumption Expenditures (PCE) Price Index crept a bit closer to the Federal Reserve's 2% inflation target; from 1.5% to 1.6% during February 2018.

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Stay tuned for the latest economic data, and the latest odds...

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Current Odds

• Current odds the United States Prime Rate will remain at 4.75% after the May 2^ND, 2018 FOMC monetary policy meeting: 98.4%  (very likely), with 1.6% odds (very unlikely) the U.S. Prime Rate will rise to 5.00%.
  
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• Current odds the United States Prime Rate will rise to 5.00% after the June 13^TH, 2018 FOMC monetary policy meeting: 83.9%  (somewhat likely), with 14.8% odds (not likely) the U.S. Prime Rate will hold at the current 4.75%, and 1.3% odds (very unlikely) the U.S. Prime Rate will rise to 5.25%.
  
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• NB: United States Prime Rate = (The Fed Funds Target Rate + 3)

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Odds At 95.9% (Very Likely) The United States Prime Rate Will Hold At 4.75% After The May 2, 2018 FOMC Monetary Policy Meeting

Prime Rate Forecast

Prime Rate Forecast

As of right now, odds are at 95.9% the Federal Open Market Committee (FOMC) will vote to leave the target range for the benchmark fed funds rate  at 1.50% - 1.75% at the May 2^ND, 2018 monetary policy meeting (very likely.)

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The current Prime Rate, which went into effect on March 21^ST, 2018, is 4.75%.

=======

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

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Jerome H. Powell's term as Chairman of the Board of Governors of the Federal Reserve System is four years.

Here is Mr. Powell's first press conference as Fed Boss:

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Stay tuned for the latest economic data, and the latest odds...

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Current Odds

• Current odds the United States Prime Rate will remain at 4.75% after the May 2^ND, 2018 FOMC monetary policy meeting: 95.9%  (very likely), with 4.1% odds (very unlikely) the U.S. Prime Rate will rise to 5.00%.
  
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• Current odds the United States Prime Rate will rise to 5.00% after the June 13^TH, 2018 FOMC monetary policy meeting: 79.8%  (somewhat likely), with 16.8% odds (not likely) the U.S. Prime Rate will hold at the current 4.75%, and 3.4% odds (very unlikely) the U.S. Prime Rate will rise to 5.25%.
  
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• NB: United States Prime Rate = (The Fed Funds Target Rate + 3)

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Donald Trump Nominates Jerome Powell To Be Next Fed Chair

Jerome Powell

Here's a clip from today's press release:

"...Thank you, Mr. President, for the faith you have shown in me through this nomination. I am both honored and humbled by this opportunity to serve our great country. If I am confirmed by the Senate, I will do everything within my power to achieve the goals assigned to the Federal Reserve by the Congress: stable prices and maximum employment.

I want to thank my wife, Elissa, for her love, support, and wise counsel. Without her, I would not be standing here. We are thinking today of our three children, and of the world they are inheriting. My five siblings and I are also thinking today of our parents, who gave us so many gifts, most of all a loving home.

In the years since the global financial crisis ended, our economy has made substantial progress toward full recovery. By many measures we are close to full employment, and inflation has gradually moved up toward our target.

Our financial system is without doubt far stronger and more resilient than it was before the crisis. Our banks have much higher capital and liquidity, are more aware of the risks they run, and are better able to manage those risks. While post-crisis improvements in regulation and supervision have helped us to achieve these gains, I will continue to work with my colleagues to ensure that the Federal Reserve remains vigilant and prepared to respond to changes in markets and evolving risks.

Finally, I have had the great privilege of serving under Chairman Bernanke and Chair Yellen, who guided the economy with insight and courage through difficult times while moving monetary policy toward greater transparency and predictability. Each of them embodies the highest ideals of public service--unquestioned integrity and unflinching commitment to fulfilling our mandate. Inside the Federal Reserve, we understand that monetary policy decisions matter for American families and communities. I strongly share that sense of mission and am committed to making decisions with objectivity and based on the best available evidence, in the longstanding tradition of monetary policy independence.

Mr. President, thank you again for this extraordinary opportunity to serve the American people..."

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