FOMC Meeting Schedule (Tentative) for 2017

Earlier today, The Federal Open Market Committee (FOMC) released its tentative monetary policy meeting schedule for 2017. The FOMC doesn't always stick to the exact dates on the schedule (hence tentative), but they do always meet at least eight times per calendar year.

Why is this schedule important to you? Because it's at these monetary policy meetings that The FOMC votes on whether to raise, lower or make no changes to The Fed Funds Target Rate, and when the Fed Funds Target Rate changes, the United States Prime Rate (also known as the Fed Prime Rate) will also change (how the US Prime Rate works).

Here's the tentative schedule for 2017:

• February 1, 2017

• March 15, 2017
  (+ Press Conference + Economic Projections)

• May 3, 2017

• June 14, 2017
  (+ Press Conference + Economic Projections)

• July 26, 2017

• September 20, 2017
  (+ Press Conference + Economic Projections)

• November 1, 2017

• December 13, 2017
  (+ Press Conference + Economic Projections)

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Odds At 92.8% (Very Likely) The U.S. Prime Rate Will Continue At 3.5% After The July 27, 2016 FOMC Monetary Policy Meeting

Prime Rate Forecast

Latest Prime Rate Forecast

As of right now, the investors who trade in fed fund futures via the CME Group have odds at 92.8% (as implied by current pricing on contracts) that the Federal Open Market Committee (FOMC) will vote leave the target range for the benchmark fed funds rate at 0.25% - 0.5% at the July 27^TH, 2016 monetary policy meeting (very likely.)

The current United States Prime Rate, which went into effect on December 17, 2015, is 3.5%.

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

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Brexit

The results of United Kingdom referendum on leaving the European shocked many, and shocked financial markets too, causing significant heartburn around the world.

It was close, with 51.9% voting to leave, and 48.1% voting to stay.

The news caused a significant shift in interest-rate futures.  Not only are traders certain that the Fed will not raise short-term rates, including the U.S. Prime Rate, on July 27, but they are now pricing in a 7.2% chance the Fed will cut the Prime Rate back down to 3.25% next month.

Stay tuned for the latest odds...

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Current Odds

• Current odds that the Prime Rate will continue at 3.5% after the July 27^TH, 2016 FOMC monetary policy meeting: 92.8% (very likely.)
  
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• Current odds that the Prime Rate will continue at 3.5% after the September 21^ST, 2016 FOMC monetary policy meeting: 92.8% (very likely.)
  
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• Current odds that the Prime Rate will continue at 3.5% after the November 2^ND, 2016 FOMC monetary policy meeting: 91.1% (very likely.)
  
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• Current odds that the Prime Rate will continue at 3.5% after the December 14^TH, 2016 FOMC monetary policy meeting: 71.0% (somewhat likely), with a 23.2% chance of a rate increase, and a 5.3% chance of a rate cut.
  
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• Current odds that the Prime Rate will continue at 3.5% after the February 1^ST, 2017 FOMC monetary policy meeting: 69.7% (somewhat likely), with a 24.1% chance of a rate increase, and a 5.2% chance of a rate cut.
  
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• NB: United States Prime Rate = (The Fed Funds Target Rate + 3)

The odds associated with fed fund futures contracts -- widely accepted as the best predictor of what the FOMC will do with the benchmark Fed Funds Target Rate -- are constantly changing, so stay tuned for the latest odds.

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Odds At 12% (Not Likely) The U.S. Prime Rate Will Rise At The July 27, 2016 FOMC Monetary Policy Meeting

Prime Rate Forecast

Latest Prime Rate Forecast

As of right now, the investors who trade in fed fund futures via the CME Group have odds at 12% (as implied by current pricing on contracts) that the Federal Open Market Committee (FOMC) will vote to raise the target range for the benchmark fed funds rate by at least 25 basis points (0.25 percentage point) at the July 27^TH, 2016 monetary policy meeting (not likely.)

The current United States Prime Rate, which went into effect on December 17, 2015, is 3.5%.

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

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The latest odds reflect recent readings on jobs, inflation, wages, GDP, manufacturing, crude oil and housing.

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

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Current Odds

• Current odds that the Prime Rate (currently 3.5%) will rise by at least 25 basis points at the July 27^TH, 2016 FOMC monetary policy meeting: 12% (not likely.)
  
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• Current odds that the Prime Rate (currently 3.5%) will rise by at least 25 basis points at the September 21^ST, 2016 FOMC monetary policy meeting: 22% (not likely.)
  
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• Current odds that the Prime Rate (currently 3.5%) will rise by at least 25 basis points at the November 2^ND, 2016 FOMC monetary policy meeting: 24% (not likely.)
  
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• Current odds that the Prime Rate (currently 3.5%) will rise by at least 25 basis points at the December 14^TH, 2016 FOMC monetary policy meeting: 46% (on the fence.)
  
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• Current odds that the Prime Rate (currently 3.5%) will rise by at least 25 basis points at the February 1^ST, 2017 FOMC monetary policy meeting: 48% (on the fence.)
  
  ========
  
  
• NB: United States Prime Rate = (The Fed Funds Target Rate + 3)

The odds associated with fed fund futures contracts -- widely accepted as the best predictor of what the FOMC will do with the benchmark Fed Funds Target Rate -- are constantly changing, so stay tuned for the latest odds.

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Fourth FOMC Meeting of 2016 Adjourned: U.S. Prime Rate Holds At 3.5%

U.S. Prime Rate

The Federal Open Market Committee (FOMC) of the Federal Reserve has just adjourned its fourth monetary policy meeting of 2016 and, in accordance with our most recent forecast, has voted to leave short-term interest rates at their current levels. Therefore, the benchmark target range for the federal funds rate will remain at 0.25% - 0.5%, and the United States Prime Rate (a.k.a the National or Fed Prime Rate) will continue at the current 3.5%.

Here's a clip from today's FOMC press release (note text in bold):

"...Information received since the Federal Open Market Committee met in April indicates that the pace of improvement in the labor market has slowed while growth in economic activity appears to have picked up. Although the unemployment rate has declined, job gains have diminished. Growth in household spending has strengthened. Since the beginning of the year, the housing sector has continued to improve and the drag from net exports appears to have lessened, but business fixed investment has been soft. Inflation has continued to run below the Committee's 2 percent longer-run objective, partly reflecting earlier declines in energy prices and in prices of non-energy imports. Market-based measures of inflation compensation declined; most survey-based measures of longer-term inflation expectations are little changed, on balance, in recent months.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee currently expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market indicators will strengthen. Inflation is expected to remain low in the near term, in part because of earlier declines in energy prices, but to rise to 2 percent over the medium term as the transitory effects of past declines in energy and import prices dissipate and the labor market strengthens further. The Committee continues to closely monitor inflation indicators and global economic and financial developments.

Against this backdrop, the Committee decided to maintain the target range for the federal funds rate at 1/4 to 1/2 percent. The stance of monetary policy remains accommodative, thereby supporting further improvement in labor market conditions and a 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. In light of the current shortfall of inflation from 2 percent, the Committee will carefully monitor actual and expected progress toward its inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant only 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.

The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction, and it anticipates doing so until normalization of the level of the federal funds rate is well under way. This policy, by keeping the Committee's holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.

Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; James Bullard; Stanley Fischer; Esther L. George; Loretta J. Mester; Jerome H. Powell; Eric Rosengren; and Daniel K. Tarullo..."

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Federal Reserve Economic Projections

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Odds At 4% (Very Unlikely) The U.S. Prime Rate Will Rise At The June 15, 2016 FOMC Monetary Policy Meeting

Prime Rate Forecast

Latest Prime Rate Forecast

As of right now, the investors who trade in fed fund futures via the CME Group have odds at 4% (as implied by current pricing on contracts) that the Federal Open Market Committee (FOMC) will vote to raise the target range for the benchmark fed funds rate by at least 25 basis points (0.25 percentage point) at the June 15^TH, 2016 monetary policy meeting (very unlikely.)

The current United States Prime Rate, which went into effect on December 17, 2015, is 3.5%.

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

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The latest odds on a rate increase at some point during the rest of 2016 declined in response to recent economic data, including readings on jobs, inflation, wages, GDP, manufacturing, housing, consumer confidence and consumer sentiment.

Earlier today, the Labor Department reported that nonfarm payrolls increased by a very tepid 38,000 during May, with negative revisions for both March and April, and the labor force participation rate declined from 62.8% to 62.6%.

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Current Odds

• Current odds that the Prime Rate (currently 3.5%) will rise by at least 25 basis points at the June 15^TH, 2016 FOMC monetary policy meeting: 4% (very unlikely.)
  
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• Current odds that the Prime Rate (currently 3.5%) will rise by at least 25 basis points at the July 27^TH, 2016 FOMC monetary policy meeting: 31% (not likely.)
  
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• Current odds that the Prime Rate (currently 3.5%) will rise by at least 25 basis points at the September 21^ST, 2016 FOMC monetary policy meeting: 44% (on the fence.)
  
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• Current odds that the Prime Rate (currently 3.5%) will rise by at least 25 basis points at the November 2^ND, 2016 FOMC monetary policy meeting: 45% (on the fence.)
  
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• Current odds that the Prime Rate (currently 3.5%) will rise by at least 25 basis points at the December 14^TH, 2016 FOMC monetary policy meeting: 61% (somewhat likely.)
  
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• Current odds that the Prime Rate (currently 3.5%) will rise by at least 25 basis points at the February 1^ST, 2017 FOMC monetary policy meeting: 64% (somewhat likely.)
  
  ========
  
  
• NB: United States Prime Rate = (The Fed Funds Target Rate + 3)

The odds associated with fed fund futures contracts -- widely accepted as the best predictor of what the FOMC will do with the benchmark Fed Funds Target Rate -- are constantly changing, so stay tuned for the latest odds.

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