United States Prime Rate

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

Saturday, November 09, 2024

Odds Now At 60% (On The Fence) The U.S. Prime Rate Will Be Cut to 7.50% at the December 18, 2024 FOMC Monetary Policy Meeting

United States Prime Rate Forecast
Prime Rate Prediction

Prime Rate Forecast

As of right now, our odds are at 60% (on the fence) the Federal Open Market Committee (FOMC) of the Federal Reserve will vote to lower the benchmark target range for the fed funds rate (TRFFR) by 0.25 percentage point (25 basis points [bps]) at the December 18TH, 2024 monetary policy meeting.


A 25 bps cut would cause Prime to decrease, from the
current 7.75%, to  7.50%. 

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  • Year-on-year (Y-O-Y), the CORE PCE Price Index moved sideways from August to September -- 2.7% to 2.7%.

  • Y-O-Y, from August to September, the PCE Price Index eased, from 2.3% to 2.1%.

Stay tuned...
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The United States Prime Rate was lowered to the current 7.75% on November 7, 2024.

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SUMMARY

  • Current odds the U.S. Prime Rate will be cut to 7.50% at the December 18TH, 2024 FOMC monetary policy meeting: 60% (On The Fence.)
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Thursday, November 07, 2024

Seventh FOMC Meeting of 2024 Adjourned: United States Prime Rate Is Now 7.75%

United States Prime Rate is now 7.75%
United States Prime Rate

The Federal Open Market Committee (FOMC) of the Federal Reserve System has just adjourned its seventh monetary policy meeting of 2024 and, in accordance with our latest forecast, has voted to cut the benchmark target range for the federal funds rate by 25 basis points (0.25 percentage point) from 4.75% - 5.00% to 4.50% - 4.75%. Therefore, the United States Prime Rate (a.k.a the Fed Prime Rate) is now 7.75%.

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):

"...Recent indicators suggest that economic activity has continued to expand at a solid pace. Since earlier in the year, labor market conditions have generally eased, and the unemployment rate has moved up but remains low. Inflation has made progress toward the Committee's 2 percent objective but remains somewhat 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 roughly in balance. The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate.

In support of its goals, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 4-1/2 to 4-3/4 percent. In considering 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; Thomas I. Barkin; Michael S. Barr; Raphael W. Bostic; Michelle W. Bowman; Lisa D. Cook; Mary C. Daly; Beth M. Hammack; Philip N. Jefferson; Adriana D. Kugler; and Christopher J. Waller.
.."

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Sunday, September 29, 2024

Odds Now At 99% (VERY LIKELY) The U.S. Prime Rate Will Be Cut By At Least 25 Basis Points (0.25 Percentage Point) at the November 7, 2024 FOMC Monetary Policy Meeting

United States Prime Rate Forecast
Prime Rate Prediction

Prime Rate Forecast

As of right now, our odds are at 99% (very likely) the Federal Open Market Committee (FOMC) of the Federal Reserve will vote to lower the cardinal target range for the fed funds rate (TRFFR) by at least 0.25 percentage point (25 basis points [bps]) at the November 7TH, 2024 monetary policy meeting.

A 25 bps cut would cause Prime to decrease, from the
current 8.00%, to  7.75%. 

A 50 bps cut would lower the
TRFFR to a range of 4.25% - 4.50%, and would result in a Prime Rate of 7.50%, a level not seen since December of 2022.

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  • Y-O-Y, the Core CPI for August, 2024 came in at +3.197%.
  • Stay tuned...
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    The United States Prime Rate was lowered to the current 8.00% on September 18, 2024.

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    SUMMARY

    • Current odds the U.S. Prime Rate will be cut to 7.75% or lower at the November 7TH, 2024 FOMC monetary policy meeting: 99% (very likely.)
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    Wednesday, September 18, 2024

    Sixth FOMC Meeting of 2024 Adjourned: United States Prime Rate Is Now 8.00%

    United States Prime Rate is now 8.00%
    United States Prime Rate

    The Federal Open Market Committee (FOMC) of the Federal Reserve System has just adjourned its sixth monetary policy meeting of 2024 and, in accordance with our latest forecast, has voted to cut the benchmark target range for the federal funds rate by 50 basis points (0.50 percentage point) from 5.25% - 5.50% to 4.75% - 5.00%. Therefore, the United States Prime Rate (a.k.a the Fed Prime Rate) is now 8.00%.

    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):

    "...Recent indicators suggest that economic activity has continued to expand at a solid pace. Job gains have slowed, and the unemployment rate has moved up but remains low. Inflation has made further progress toward the Committee's 2 percent objective but remains somewhat elevated.

    The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. The Committee has gained greater confidence that inflation is moving sustainably toward 2 percent, and judges that the risks to achieving its employment and inflation goals are roughly in balance. The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate.

    In light of the progress on inflation and the balance of risks, the Committee decided to lower the target range for the federal funds rate by 1/2 percentage point to 4-3/4 to 5 percent. In considering 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; Thomas I. Barkin; Michael S. Barr; Raphael W. Bostic; Lisa D. Cook; Mary C. Daly; Beth M. Hammack; Philip N. Jefferson; Adriana D. Kugler; and Christopher J. Waller. Voting against this action was Michelle W. Bowman, who preferred to lower the target range for the federal funds rate by 1/4 percentage point at this meeting..."

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    Sunday, August 04, 2024

    Odds Now At 95% (VERY LIKELY) The U.S. Prime Rate Will Be Cut By At Least 25 Basis Points (0.25 Percentage Point) at the September 18, 2024 FOMC Monetary Policy Meeting

    United States Prime Rate Forecast
    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 LOWER the benchmark target range for the fed funds rate (TRFFR) by at least 25 basis points (bps) at the September 18TH, 2024 monetary policy meeting.

    If a 25 bps cut happens, the
    United States Prime Rate (a.k.a Fed Prime Rate) would decline from the current 8.50%, to  8.25%. 

    There is also a very real chance that the
    FOMC will cut by 50 bps next month, setting the TRFFR at 4.75% - 5.00%.  This would result in a U.S. Prime Rate of 8.00%, a level not seen since March of 2023.

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    Eurodollar LIBOR Has An Excellent Record of Predicting
    Recessions for The American Economy

      
    Over the years, U.S. dollar (Eurodollar) LIBOR rates have been good at predicting what's in the economic offing for the American economy.

    Right now, there is an inversion in USD LIBOR rates.  Current rates (August 2, 2024) are as follows:

    • 1-Month LIBOR: 5.46652%
    • 3-Month LIBOR: 5.48934%
    • 6-Month LIBOR: 5.43589%
    The 6-month rate is lower than the 3-month rate, which = economic concerns ahead!  

    Is LIBOR a better prognosticator than the Treasury yield curve or the LEI?  Our thesis = 👍 Yes! 🙌

    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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    Current Odds

    • Current odds the U.S. Prime Rate will be cut to 8.25% or lower at the September 18TH, 2024 FOMC monetary policy meeting: 95% (very likely.)
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    Wednesday, July 31, 2024

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

    U.S. 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 fifth 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 moderated, and the unemployment rate has moved up but remains low. Inflation has eased over the past year but remains somewhat elevated. In recent months, there has been some further progress toward the Committee's two 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 continue to move into better balance. The economic outlook is uncertain, and 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 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; Austan D. Goolsbee; Philip N. Jefferson; Adriana D. Kugler; and Christopher J. Waller. Austan D. Goolsbee voted as an alternate member at this meeting..."

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

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    Monday, June 17, 2024

    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

    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 July 31ST, 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
      
    www.FedPrimeRate.com: 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.

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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 remain at 8.50% after the July 31ST, 2024 FOMC monetary policy meeting: 90% (very likely.)
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    Wednesday, June 12, 2024

    Fourth FOMC Meeting of 2024 Adjourned: United States Prime Rate Holds at 8.50%

    U.S. 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 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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    Tuesday, May 07, 2024

    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

    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 June 12TH, 2024 monetary policy meeting, with the United States Prime Rate (a.k.a Fed Prime Rate) holding at 8.50%.

     =======

    Jobs + Wages Weakening: Exactly What The Fed Wants
      
    • CHART: Number of Jobless People per Job Opening - MARCH 2024 UPDATE
      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...
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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 remain at 8.50% after the June 12TH, 2024 FOMC monetary policy meeting: 90% (very likely.)
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    Wednesday, May 01, 2024

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

    U.S. 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 mortgagebacked 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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