Singapore Maintains Steady Monetary Outlook as Positive Output Gap Persists into 2025 
New RBNZ Governor Anna Breman Aims to Restore Stability After Tumultuous Years 
BOJ Seen Moving Toward December Rate Hike as Yen Slides 
Indonesia Aims to Strengthen Rupiah as Central Bank Targets 16,400–16,500 Level 
Fed Officials Split as Powell Weighs December Interest Rate Cut 
FOMC increased interest rates in March and June and increased its forecast from three rate hikes in 2018 to four rate hikes. June decision was unanimous. Current Federal funds rate - 175-200 bps (Note, all calculations are based on data as of 25th June)
- August 2018 meeting: Market is attaching 100 percent probability that rates will be at 1.75-2.00 percent.
- September 2018 meeting: Market is attaching 29.2 percent probability that rates will be at 1.75-2.00 percent, and 70.8 percent probability that rates will be at 2.00-2.25 percent.
- November 2018 meeting: Market is attaching 27.7 percent probability that rates will be at 1.75-2.00 percent, 68.6 percent probability that rates will be at 2.00-2.25 percent, and 3.7 percent probability that rates will be at 2.25-2.50 percent.
- December 2018 meeting: Market is attaching 11 percent probability that rates will be at 1.75-2.00 percent, 43.9 percent probability that rates will be at 2.00-2.25 percent, 42.8 percent probability that rates will be at 2.25-2.50 percent, and 2.2 percent probability that rates will be at 2.50-2.75 percent.
- January 2019 meeting: Market is attaching 10.1 percent probability that rates will be at 1.75-2.00 percent, 40.3 percent probability that rates will be at 2.00-2.25 percent, 42.4 percent probability that rates will be at 2.25-2.50 percent, and 7 percent probability that rates will be at 2.50-2.75 percent, and 0.3 percent probability that rates will be at 2.75-3.00 percent.
The probability is suggesting,
- Since our last review a week ago, the probabilities have softened.
- The market is pricing the third hike for 2018 in September and pricing it with 70.8 percent probability compared to 83.3 percent a week ago.
- The market is pricing the fourth hike in December with 49.7 percent probability instead of 53.4 percent probability just a week ago.
- It is important to note that despite Fed’s forecast, the market is not ready to price in a fourth hike.
