Bank of Japan Eyes Further Rate Hikes Amid Middle East Tensions and Inflation Pressures 
Federal Reserve Probes Big Banks Over Private Credit Exposure Amid Growing Systemic Risk Concerns 
Bank of Japan's Ueda Flags Low Real Interest Rates as Key Factor in Rate Hike Timing 
RBNZ Holds Rates at 2.25% as Middle East Conflict Fuels Inflation Concerns 
ECB Warns of Rising Inflation Risks Amid Iran War Energy Shock 
Citigroup Delays Fed Rate Cut Forecast Amid Strong Jobs Data and Inflation Concerns 
FxWirePro: Daily Commodity Tracker - 21st March, 2022 
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 2nd July)
- August 2018 meeting: Market is attaching 96.5 percent probability that rates will be at 1.75-2.00 percent, and 3.5 percent probability that rates will be at 2.00-2.25 percent.
- September 2018 meeting: Market is attaching 24.7 percent probability that rates will be at 1.75-2.00 percent, 72.7 percent probability that rates will be at 2.00-2.25 percent, and 2.6 percent probability that rates will be at 2.25-2.50 percent.
- November 2018 meeting: Market is attaching 23.4 percent probability that rates will be at 1.75-2.00 percent, 70.2 percent probability that rates will be at 2.00-2.25 percent, and 6.4 percent probability that rates will be at 2.25-2.50 percent.
- December 2018 meeting: Market is attaching 9.7 percent probability that rates will be at 1.75-2.00 percent, 42.8 percent probability that rates will be at 2.00-2.25 percent, 43.7 percent probability that rates will be at 2.25-2.50 percent, and 3.8 percent probability that rates will be at 2.50-2.75 percent.
- January 2019 meeting: Market is attaching 8.8 percent probability that rates will be at 1.75-2.00 percent, 39.6 percent probability that rates will be at 2.00-2.25 percent, 43.6 percent probability that rates will be at 2.25-2.50 percent, and 7.6 percent probability that rates will be at 2.50-2.75 percent, and 0.4 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 tightened for the near month and eased for the far month.
- The market is pricing the third hike for 2018 in September and pricing it with 75.3 percent probability compared to 70.8 percent a week ago.
- The market is pricing the fourth hike in December with 47.5 percent probability instead of 49.7 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.
