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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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...

 

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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 November 1^ST, 2023 FOMC monetary policy meeting: 90% (likely.)
  

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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%.

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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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Odds Now At 100% (Certain) The U.S. Prime Rate Will Rise to 8.50% After This Afternoon's 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 raise the benchmark target range for the fed funds rate to  5.25% - 5.50% at today's monetary policy meeting, with the United States Prime Rate (a.k.a Fed Prime Rate) rising to 8.50%.

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Many economists keep warning that a recession may be in the offing, but working  America and consumer America are in defiance.

Employment remains very strong, while the latest Consumer Confidence reading (for this month) proves that Americans are still spending like...Americans.

Interesting note: Since the beginning of this year, government has been hiring more than any other sector. :o(

Stay tuned...

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CHART: Job Growth In America
by Sector, So Far In 2023

Chart courtesy: The New York Post

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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 today's FOMC monetary policy meeting: 100% (certain.)
  

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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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Odds Now At 90% (Likely) The U.S. Prime Rate Will Hold At 8.25% After The June 14, 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  5.00% - 5.25% at the June 14^TH, 2023 monetary policy meeting, with the United States Prime Rate (a.k.a Fed Prime Rate) holding at 8.25%.

 

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INFLATION!

 

Both the CPI and the Core PCE remain above the Fed's comfort zone, but since rate increases take time to ripple through the economy, chances are pretty good that the Fed will choose to pause (do nothing) at the June 14^TH FOMC meeting.

Meanwhile, the jobs picture (Employment Situation, JOLTS, Jobless Claims, etc.) isn't helping.

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 continue at 8.25% after the June 14^TH, 2023 FOMC monetary policy meeting: 90% (likely.)
  

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Odds Now At 100% (Certain) The U.S. Prime Rate Will Rise To 8.25% After The May 3, 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 raise the benchmark target range for the fed funds rate to  5.00% - 5.25% at the May 3^RD, 2023 monetary policy meeting, with the United States Prime Rate (a.k.a Fed Prime Rate) rising to 8.25%.

 

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The United States Prime Rate was raised to the current 8.00% on March 22, 2023.

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Recent inflation reads should prompt the Fed to raise short-term rates again next month (May 3^RD.) The last time the U.S. Prime Rate was raised to 8.25% was June 29, 2006.

Stay tuned...

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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 8.25% after the May 3^RD, 2023 FOMC monetary policy meeting: 100% (certain.)
  

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Odds Now At 100% (Certain) The U.S. Prime Rate Will Continue At 8.00% After The May 3, 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  4.75% - 5.00% at the May 3, 2023 monetary policy meeting, with the United States Prime Rate (a.k.a Fed Prime Rate) holding at 8.00%.

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The United States Prime Rate was raised to the current 8.00% on March 22, 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 8.00% after the May 3, 2023 FOMC monetary policy meeting: 100% (certain.)
  

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Odds Now At 100% (Certain) The U.S. Prime Rate Will Rise To At Least 8.00% After The March 22, 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 raise the target range for the benchmark fed funds rate to at least  4.75% - 5.00%, at the March 22, 2023 monetary policy meeting, with the United States Prime Rate (a.k.a Fed Prime Rate) rising to at least 8.00%.

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The United States Prime Rate was raised to the current 7.75% on February 1, 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 at least 8.00% after the March 22, 2023 FOMC monetary policy meeting: 100% (certain.)
  

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Odds Now At 100% (Certain) The U.S. Prime Rate Will Rise To At Least 7.75% After The February 1, 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 raise the target range for the benchmark fed funds rate to at least  4.50% - 4.75%, at the February 1, 2023 monetary policy meeting, with the United States Prime Rate (a.k.a Fed Prime Rate) rising to at least 7.75%.

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The United States Prime Rate was raised to the current 7.50% on December 14, 2022.

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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 at least 7.75% after the February 1, 2023 FOMC monetary policy meeting: 100% (certain.)
  

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Odds Now At 100% (Certain) The U.S. Prime Rate Will Rise To At Least 7.50% After The December 14, 2022 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 raise the target range for the benchmark fed funds rate, from the current 3.75% - 4.00%, to at least  4.25% - 4.50%, at the December 14^TH, 2022 monetary policy meeting, with the United States Prime Rate (a.k.a Fed Prime Rate) rising to at least 7.50%.

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The United States Prime Rate was raised to the current 7.00% on November 2^ND, 2022.

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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 at least 7.50% after the December 14^TH, 2022 FOMC monetary policy meeting: 100% (certain.)
  

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Odds Now At 100% (Certain) The U.S. Prime Rate Will Rise To At Least 6.75% After The November 2, 2022 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 raise the target range for the benchmark fed funds rate, from the current 3.00% - 3.25%, to at least   3.50% - 3.75%, at the November 2^ND, 2022 monetary policy meeting, with the U.S. Prime Rate (a.k.a Fed Prime Rate) rising to at least 6.75%, with the possibility of an increase to 7.00%.

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Used-Home Prices Appear to Have Peaked

After hitting a record-high of $413,800 in June, the cost of a previously owned home has been easing.  The July, 2022 price was $399,200, while the August reading was $389,500.

Currently, many are predicting that a recession is in the offing. Stay tuned for upcoming data on newly built and existing homes, as those reading may offer more evidence that the Fed's actions to kill inflation are already kicking in...

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The United States Prime Rate was raised to the current 6.25% on September 21^ST, 2022.

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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 at least 6.75% after the November 2^ND, 2022 FOMC monetary policy meeting, with the possibility of an increase to 7.00%: 100% (certain.)
  
  

• NB: United States Prime Rate = (The Fed Funds Target Rate + 3)

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Odds Now At 100% (Certain) The U.S. Prime Rate Will Rise To At Least 6.00% After The September 21, 2022 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 raise the target range for the benchmark fed funds rate, from the current 2.25% - 2.50%, to at least   2.75% - 3.00%, at the September 21^ST, 2022 monetary policy meeting, with the U.S. Prime Rate (a.k.a Fed Prime Rate) rising to at least 6.00%, with the possibility of an increase to 6.25%.

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Moving On From LIBOR:
Your Comments are Welcome

 LIBOR goes away after June 30, 2023.  Anyone can comment on a proposed regulation that would implement the Adjustable Interest Rate (LIBOR) Act; comments must be submitted by August 29, 2022.

• Proposed rules document with instructions is here. 
  
  

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The United States Prime Rate was raised to the current 5.50% on July 27^TH, 2022.

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

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Stay tuned for the latest odds, and for current U.S. economic data (inflation, jobs, economic growth, wages, etc.) 

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Current Odds

• Current odds the U.S. Prime Rate will rise to at least 6.00% after the September 21^ST, 2022 FOMC monetary policy meeting, with the possibility of an increase to 6.25%: 100% (certain.)
  
  

• NB: United States Prime Rate = (The Fed Funds Target Rate + 3)

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