BoE Policymaker Alan Taylor Signals No Need for Interest Rate Hike Amid Iran War Inflation Risks 
Indonesia Plans Higher Asset Yields to Boost Rupiah and Restore Investor Confidence 
ECB Set to Raise Interest Rates as Energy Shock Fuels Eurozone Inflation Concerns 
Gold Prices Fall Amid Rate Jitters; Copper Steady as China Stimulus Eyed 
Jerome Powell Warns Against Politicizing the Federal Reserve, Defends Democratic Institutions 
BOJ Raises Interest Rates to 1% as Inflation Pressures Persist 
FOMC increased interest rates again in March and maintained its forecast for three rate hikes in 2018. FOMC also forecasted a faster pace of hikes next year than previously forecasted. March decision was unanimous. Current Federal funds rate - 150-175 bps (Note, all calculations are based on data as of 16th April)
- May 2018 meeting: Market is attaching 93.8 percent probability that rates will be at 1.50-1.75 percent, and 6.2 percent probability that rates will be at 1.75-2.00 percent.
- June 2018 meeting: Market is attaching 93.8 percent probability that rates will be at 1.75-2.00 percent, and 6.2 percent probability that rates will be at 2.00-2.25.
- August 2018 meeting: Market is attaching 90 percent probability that rates will be at 1.75-2.00 percent, and 9.9 percent probability that rates will be at 2.00-2.25 percent.
- September 2018 meeting: Market is attaching 23.1 percent probability that rates will be at 1.75-2.00 percent, 69.5 percent probability that rates will be at 2.00-2.25 percent, and 7.5 percent probability that rates will be at 2.25-2.50 percent.
- November 2018 meeting: Market is attaching 20.7 percent probability that rates will be at 1.75-2.00 percent, 64.7 percent probability that rates will be at 2.00-2.25 percent, 13.5 percent probability that rates will be at 2.25-2.50 percent, and 1 percent probability that rates will be at 2.50-2.75 percent.
- December 2018 meeting: Market is attaching 10 percent probability that rates will be at 1.75-2.00 percent, 42 percent probability that rates will be at 2.00-2.25 percent, 40 percent probability that rates will be at 2.25-2.50 percent, 7.5 percent probability that rates will be at 2.50-2.75 percent, and 0.5 percent probability that rates will be at 2.75-3.00 percent.
The probability is suggesting,
- Since our last review a week ago, the probability has eased but only marginally for both near and far months.
- Next hike is priced in June with 93.8 percent probability, instead of 98.4 percent a week ago.
- The market brought forwarded the third hike for 2018 in September and pricing it with 76.9 percent probability compared to 80.2 percent a week ago.
- The market is pricing the fourth hike in December with 48 percent probability instead of 48.3 percent probability just a week ago.
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