Eurozone Recession Risks Rise as Middle East Conflict Threatens Growth, ECB Official Warns 
BOJ Holds Interest Rates at 0.75% as Policymakers Signal Growing Inflation Concerns 
Gold Prices Fall Amid Rate Jitters; Copper Steady as China Stimulus Eyed 
Paraguay Holds Interest Rate at 5.5% as Inflation Remains Stable Amid Global Uncertainty 
Kevin Warsh Advances Toward Fed Chair Role Amid Political Tensions 
BOJ Governor Kazuo Ueda Hints at Rate Hike as Inflation Pressures Build 
South Korea Central Bank Signals Cautious Policy Amid Inflation and Middle East Tensions 
FOMC followed through its promise and hiked rates four times in 2018 and forecasted two more rate hikes for 2019. Current Federal funds rate - 225-250 bps (Note, all calculations are based on data as of 27th May)
- June 2019 meeting: Market is attaching 3.3 percent probability that rates will be at 2.00-2.25 percent, and 96.7 percent probability that rates will be at 2.25-2.50 percent.
- July 2019 meeting: Market is attaching 0.4 percent probability that rates will be at 1.75-2.00 percent, 14.9 percent probability that rates will be at 2.00-2.25 percent, and 84.7 percent probability that rates will be at 2.25-2.50 percent.
- September 2019 meeting: Market is attaching 5.2 percent probability that rates will be at 1.75-2.00 percent, 37.4 percent probability that rates will be at 2.00-2.25 percent, and 57.3 percent probability that rates will be at 2.25-2.50 percent.
- October 2019 meeting: Market is attaching 14 percent probability that rates will be at 1.75-2.00 percent, 42.1 percent probability that rates will be at 2.00-2.25 percent, and 43.8 percent probability that rates will be at 2.25-2.50 percent.
- December 2019 meeting: Market is attaching 6.6 percent probability that rates will be at 1.50-1.75 percent, 24.9 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, and 25.7 percent probability that rates will be at 2.25-2.50 percent.
The probability is suggesting,
- Since our last review a week ago, the probabilities have significantly tightened for near month and eased for the December month, as some FOMC members hinting at rate cuts going ahead.
- The market is pricing the possibility of a rate cut with 74.3 percent probability, compared to 70.3 percent last week, and 57.3 percent in the week before that.
