Fed’s Goolsbee Warns Inflation Remains Elevated, Signals Caution on Rate Cuts 
Bank of Japan Signals Potential Rate Hike as Inflation Risks Rise Amid Energy Shock 
Bank of Korea Signals Potential Interest Rate Hikes as Inflation Remains Elevated 
ECB Rate Outlook: Ceasefire Eases Pressure but Hikes Still Expected in 2026 
South Korea Central Bank Signals Cautious Policy Amid Inflation and Middle East Tensions 
Eurozone Recession Risks Rise as Middle East Conflict Threatens Growth, ECB Official Warns 
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 30th July)
- August 2018 meeting: Market is attaching 97 percent probability that rates will be at 1.75-2.00 percent, and 3 percent probability that rates will be at 2.00-2.25 percent.
- September 2018 meeting: Market is attaching 8.5 percent probability that rates will be at 1.75-2.00 percent, 88.7 percent probability that rates will be at 2.00-2.25 percent, and 2.7 percent probability that rates will be at 2.25-2.50 percent.
- November 2018 meeting: Market is attaching 8.1 percent probability that rates will be at 1.75-2.00 percent, 84.5 percent probability that rates will be at 2.00-2.25 percent, and 7.3 percent probability that rates will be at 2.25-2.50 percent.
- December 2018 meeting: Market is attaching 2.2 percent probability that rates will be at 1.75-2.00 percent, 29.2 percent probability that rates will be at 2.00-2.25 percent, 63.2 percent probability that rates will be at 2.25-2.50 percent, and 5.4 percent probability that rates will be at 2.50-2.75 percent.
- January 2019 meeting: Market is attaching 2 percent probability that rates will be at 1.75-2.00 percent, 26.6 percent probability that rates will be at 2.00-2.25 percent, 59.9 percent probability that rates will be at 2.25-2.50 percent, and 10.8 percent probability that rates will be at 2.50-2.75 percent, and 0.6 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 near and far months.
- The market is pricing the third hike for 2018 in September and pricing it with 97.3 percent probability compared to 85.7 percent a week ago.
- The market is pricing the fourth hike in December with 68.6 percent probability instead of 60.3 percent probability just a week ago.
