BOJ June Rate Hike Likely as Inflation Risks Rise Amid Middle East Tensions 
Indonesia Plans Higher Asset Yields to Boost Rupiah and Restore Investor Confidence 
ECB Keeps July Rate Options Open Amid Iran War Energy Price Risks 
ECB Set to Raise Interest Rates as Energy Shock Fuels Eurozone Inflation Concerns 
Gold Prices Fall Amid Rate Jitters; Copper Steady as China Stimulus Eyed 
RBI Hits Pause as Geopolitical Storm Clouds Gather 
Taiwan Central Bank Likely to Keep Interest Rates Unchanged Through 2027 
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 10th September)
- September 2018 meeting: Market is attaching 1.6 percent probability that rates will be at 1.75-2.00 percent, and 98.4 percent probability that rates will be at 2.00-2.25 percent.
- November 2018 meeting: Market is attaching 1.5 percent probability that rates will be at 1.75-2.00 percent, 93.3 percent probability that rates will be at 2.00-2.25 percent, and 5.1 percent probability that rates will be at 2.25-2.50 percent.
- December 2018 meeting: Market is attaching 0.3 percent probability that rates will be at 1.75-2.00 percent, 20.6 percent probability that rates will be at 2.00-2.25 percent, 75 percent probability that rates will be at 2.25-2.50 percent, and 4.1 percent probability that rates will be at 2.50-2.75 percent.
- January 2019 meeting: Market is attaching 0.3 percent probability that rates will be at 1.75-2.00 percent, 19.7 percent probability that rates will be at 2.00-2.25 percent, 72.7 percent probability that rates will be at 2.25-2.50 percent, and 7.3 percent probability that rates will be at 2.50-2.75 percent.
- March 2019 meeting: Market is attaching 0.1 percent probability that rates will be at 1.75-2.00 percent, 8.7 percent probability that rates will be at 2.00-2.25 percent, 42.6 percent probability that rates will be at 2.25-2.50 percent, and 44.4 percent probability that rates will be at 2.50-2.75 percent, and 4.2 percent probability that rates will be at 2.75-3.00 percent.
- May 2019 meeting: Market is attaching 0.1 percent probability that rates will be at 1.75-2.00 percent, 7.7 percent probability that rates will be at 2.00-2.25 percent, 38.5 percent probability that rates will be at 2.25-2.50 percent, and 44.2 percent probability that rates will be at 2.50-2.75 percent, and 9.5 percent probability that rates will be at 2.75-3.00 percent.
- June 2019 meeting: Market is attaching 0.1 percent probability that rates will be at 1.75-2.00 percent, 4.9 percent probability that rates will be at 2.00-2.25 percent, 27.2 percent probability that rates will be at 2.25-2.50 percent, and 42.1 percent probability that rates will be at 2.50-2.75 percent, 21.9 percent probability that rates will be at 2.75-3.00 percent, 3.8 percent probability that rates will be at 3.00-3.25 percent.
The probability is suggesting,
- Since our last review a week ago, the probabilities have tightened.
- The market is pricing the third hike for 2018 in September and pricing it with 98.4 percent probability, same as a week ago.
- The market is pricing the fourth hike in December with 79.1 percent probability compared to 71.2 percent a week ago.
- The first rate hike of 2019 is priced in June with 67.8 percent probability, instead of 59.7 percent probability just a week ago.
