Bank of Japan Likely to Delay Rate Hike Until July as Economists Eye 1% by September 
China Holds Loan Prime Rates Steady in January as Market Expectations Align 
ECB’s Cipollone Backs Digital Euro as Europe Pushes for Payment System Independence 
Bank of Korea Expected to Hold Interest Rates as Weak Won Limits Policy Easing 
Markets React as Tensions Rise Between White House and Federal Reserve Over Interest Rate Pressure 
RBA Expected to Raise Interest Rates by 25 Basis Points in February, ANZ Forecast Says 
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.
