Bank of Korea Signals Potential Interest Rate Hikes as Inflation Remains Elevated 
Bank of England Set to Hold Interest Rates as Inflation Risks and Iran War Impact Loom 
Japan Inflation Expectations Rise as BOJ Rate Hike Timing Faces Uncertainty 
Kevin Warsh Advances Toward Fed Chair Role Amid Political Tensions 
Paraguay Holds Interest Rate at 5.5% as Inflation Remains Stable Amid Global Uncertainty 
Gold Prices Fall Amid Rate Jitters; Copper Steady as China Stimulus Eyed 
Bank of Japan Signals Potential Rate Hike as Inflation Risks Rise Amid Energy Shock 
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 16th July)
- August 2018 meeting: Market is attaching 97.5 percent probability that rates will be at 1.75-2.00 percent, and 2.5 percent probability that rates will be at 2.00-2.25 percent.
- September 2018 meeting: Market is attaching 13.3 percent probability that rates will be at 1.75-2.00 percent, 84.6 percent probability that rates will be at 2.00-2.25 percent, and 2.2 percent probability that rates will be at 2.25-2.50 percent.
- November 2018 meeting: Market is attaching 12.9 percent probability that rates will be at 1.75-2.00 percent, 82.7 percent probability that rates will be at 2.00-2.25 percent, and 4.4 percent probability that rates will be at 2.25-2.50 percent.
- December 2018 meeting: Market is attaching 4.9 percent probability that rates will be at 1.75-2.00 percent, 39.4 percent probability that rates will be at 2.00-2.25 percent, 52.9 percent probability that rates will be at 2.25-2.50 percent, and 2.7 percent probability that rates will be at 2.50-2.75 percent.
- January 2019 meeting: Market is attaching 4.5 percent probability that rates will be at 1.75-2.00 percent, 36.5 percent probability that rates will be at 2.00-2.25 percent, 51.8 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 tightened for both near and far months.
- The market is pricing the third hike for 2018 in September and pricing it with 86.8 percent probability compared to 80.7 percent a week ago.
- The market is pricing the fourth hike in December with 55.6 percent probability instead of 53.5 percent probability just a week ago.
- The market has started pricing the fourth rate hike with more than 50 percent probability again since last week.
