United States Prime Rate

also known as the Fed, National or United States Prime Rate,
from the interest-rate specialists at www.FedPrimeRate.comSM

Thursday, February 08, 2024

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

United States Prime Rate Forecast
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 20TH, 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 20TH, as many were hoping might happen.

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 March 20TH, 2024 FOMC monetary policy meeting: 90% (very likely.)
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Wednesday, January 03, 2024

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

United States Prime Rate Forecast
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 31ST, 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...
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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 January 31ST, 2024 FOMC monetary policy meeting: 90% (very likely.)
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Friday, December 01, 2023

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

United States Prime Rate Forecast
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 13TH, 2023 monetary policy meeting, with the United States Prime Rate (a.k.a Fed Prime Rate) holding at 8.50%.

 

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)

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Current Odds
  • Current odds the U.S. Prime Rate will continue at 8.50% after the December 13TH, 2023 FOMC monetary policy meeting: 100% (certain.)
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Wednesday, October 11, 2023

Odds Now At 90% (Likely) The U.S. Prime Rate Will Hold At 8.50% After The November 1, 2023 FOMC Monetary Policy Meeting

United States Prime Rate Forecast
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 1ST, 2023 monetary policy meeting, with the United States Prime Rate (a.k.a Fed Prime Rate) holding at 8.50%.

 

  • 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.

=======

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 1ST, 2023 FOMC monetary policy meeting: 90% (likely.)
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Saturday, August 05, 2023

Odds Now At 80% (Likely) The U.S. Prime Rate Will Hold At 8.50% After The September 20, 2023 FOMC Monetary Policy Meeting

United States Prime Rate Forecast
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 20TH, 2023 monetary policy meeting, with the United States Prime Rate (a.k.a Fed Prime Rate) holding at 8.50%.

 
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.

=======

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

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Wednesday, July 26, 2023

Odds Now At 100% (Certain) The U.S. Prime Rate Will Rise to 8.50% After This Afternoon's FOMC Monetary Policy Meeting

United States Prime Rate Forecast
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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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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Wednesday, June 21, 2023

Odds Now At 80% (Likely) The U.S. Prime Rate Will Rise to 8.50% After The July 26, 2023 FOMC Monetary Policy Meeting

United States Prime Rate Forecast
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 26TH, 2023 monetary policy meeting, with the United States Prime Rate (a.k.a Fed Prime Rate) rising to 8.50%.

 
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.

=======

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

======= 

Current Odds
  • Current odds the U.S. Prime Rate will rise to 8.50% after the July 26TH, 2023 FOMC monetary policy meeting: 80% (likely.)
=========


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Saturday, May 13, 2023

Odds Now At 90% (Likely) The U.S. Prime Rate Will Hold At 8.25% After The June 14, 2023 FOMC Monetary Policy Meeting

United States Prime Rate Forecast
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 14TH, 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 14TH 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.

=======

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

======= 

Current Odds
  • Current odds the U.S. Prime Rate will continue at 8.25% after the June 14TH, 2023 FOMC monetary policy meeting: 90% (likely.)
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Sunday, April 23, 2023

Odds Now At 100% (Certain) The U.S. Prime Rate Will Rise To 8.25% After The May 3, 2023 FOMC Monetary Policy Meeting

United States Prime Rate Forecast
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 3RD, 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 3RD.) 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 3RD, 2023 FOMC monetary policy meeting: 100% (certain.)
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Friday, March 24, 2023

Odds Now At 100% (Certain) The U.S. Prime Rate Will Continue At 8.00% After The May 3, 2023 FOMC Monetary Policy Meeting

United States Prime Rate Forecast
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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Thursday, February 09, 2023

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

United States Prime Rate Forecast
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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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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Saturday, December 17, 2022

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

United States Prime Rate Forecast
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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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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Wednesday, November 09, 2022

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

United States Prime Rate Forecast
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 14TH, 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 2ND, 2022.

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Current Odds
  • Current odds the U.S. Prime Rate will rise to at least 7.50% after the December 14TH, 2022 FOMC monetary policy meeting: 100% (certain.)
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Friday, September 23, 2022

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

United States Prime Rate Forecast
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 2ND, 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 21ST, 2022.

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Current Odds
  • Current odds the U.S. Prime Rate will rise to at least 6.75% after the November 2ND, 2022 FOMC monetary policy meeting, with the possibility of an increase to 7.00%: 100% (certain.)


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Monday, November 30, 2009

Futures Market 100% Certain U.S. Prime Rate Will Hold At 3.25% After The December 15 FOMC Monetary Policy Meeting

prime rate forecast
If you've been wondering when the Fed is going to start a cycle of raising short-term interest rates, the one macroeconomic figure you need to pay attention to is the unemployment rate. That's because the Bernanke Fed is confident that the nation's jobless rate is going to remain stubbornly high well into 2010 and likely beyond, which in turn will serve as a check on inflation. The Fed is still focused on pumping as much stimulus into the economy as it possibly can, to get the economy back to durable growth as soon as possible. It doesn't want to choke off an economic recover by raising short-term rates too soon, but it also doesn't want to keep rates too low for too long, and spark and raging inflation problem down the road. But here's the bottom line: the Fed believes that high unemployment together with continued housing market woes will act as a powerful economic sedative, keeping both consumer and wholesale prices under control.

Many investors are worried that the Fed is going to have an economic growth bias for too long, and that it will tolerate some inflation in exchange for growth. Just look at the price of gold as one piece of evidence: New York Spot was at $816.30 on November 28, 2008, and closed at $1,176.70 a few days ago (on November 27, 2009.)

Many are also worried about the current state of the dollar, but I'm not. The dollar is cyclical. It's been very low before, and has bounced back every time. When the economy returns to sustainable growth and the Fed back off from being the dominant force in the economy, the dollar will strengthen again, as simple as that.

So, does the Fed have it right about weak employment keeping inflation in check? I think so. With so many Americans out of work, or struggling with reduced hours, or forced to work part-time, consumer spending will be weak for some time. Exacerbating the jobs problem: too many homeowners are upside down with their mortgage; if they sell they lose big, and there's no home equity to tap into, the same home equity which supported strong consumer spending before the housing bust.

The above economic woes are acting as a strong disinflationary force in the economy, and will continue doing so for years -- yes, years.

So don't be surprised if the Fed keeps short-term rates -- including the U.S. Prime Rate -- at superlow levels throughout 2010.

Of course, for the latest and most accurate rate forecast, stay tuned to this blog.

Housing Market News: Some Good, Some Bad

OK, first the bad. The Mortgage Bankers Association (MBA) recently reported that mortgage delinquencies have set a new record high. Here's a clip from the MBA press release:

"...The delinquency rate for mortgage loans on one-to-four-unit residential properties rose to a seasonally adjusted rate of 9.64 percent of all loans outstanding as of the end of the third quarter of 2009, up 40 basis points from the second quarter of 2009, and up 265 basis points from one year ago, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey. The non-seasonally adjusted delinquency rate increased 108 basis points from 8.86 percent in the second quarter of 2009 to 9.94 percent this quarter...The delinquency rate breaks the record set last quarter. The records are based on MBA data dating back to 1972..."

And now the good: sales of both existing (preowned) and newly built homes improved during October 2009, thanks in no small part to Uncle Sammy's $8,000, first-time homebuyer tax credit (there's also a tax credit of up to $6,500 available for longtime homeowners who purchase a replacement home.) That's good news for the housing market in general, but there's more: the credit has been extended. For more, check out this IRS page.

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As of right now, the investors who trade in fed funds futures at the Chicago Board of Trade have odds at 100% (as implied by current pricing on contracts) that the FOMC will vote to leave the benchmark target range for the Federal Funds Rate at its current level at the December 15TH, 2009 monetary policy meeting.


Summary of the Latest Prime Rate Forecast:
  • Current odds that the Prime Rate will remain at the current 3.25% after the December 15TH, 2009 FOMC monetary policy meeting is adjourned: 100% (certain)
  • NB: U.S. Prime Rate = (The Federal Funds Target Rate + 3)

The odds related to federal-funds futures contracts -- widely accepted as the best predictor of where the FOMC will take the benchmark Fed Funds Target Rate -- are constantly changing, so stay tuned for the latest odds.

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