BOJ Flags Import Costs and Yen Shocks as Persistent Inflation Risks 
Fed’s Williams Signals One More Rate Hike Before Year-End 
RBA Set for September Rate Hike as Inflation Stays High 
Fed Unveils Stablecoin Rules Under GENIUS Act 
BOJ Set for 25-Basis-Point Rate Hike as Yen Weakness Fuels Inflation 
Yen Sinks as BOJ Rate Hike Fails to Impress Markets 
RBA Hikes Interest Rate to 4.60% as Inflation Risks Rise 
Trump Demands Powell Resign Over Fed Renovation Cost Overruns 
BlackRock’s Rick Rieder Favors Bonds Over Stocks as Treasury Yields Surge 
Global Central Banks Brace for More Rate Hikes as Inflation Risks Rise 
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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 8th July)
- July 2019 meeting: Market is attaching 8 percent probability that rates will be at 1.75-2.00 percent, and 92 percent probability that rates will be at 2.00-2.25 percent.
- September 2019 meeting: Market is attaching 5.5 percent probability that rates will be at 1.50-1.75 percent, 66.2 percent probability that rates will be at 1.75-2.00 percent, and 28.3 percent probability that rates will be at 2.25-2.50 percent.
- October 2019 meeting: Market is attaching 1.9 percent probability that rates will be at 1.25-1.50 percent, 26.3 percent probability that rates will be at 1.50-1.75 percent, 53.2 percent probability that rates will be at 1.75-2.00 percent, and 18.6 percent probability that rates will be at 2.00-2.25 percent.
- December 2019 meeting: Market is attaching 12.4 percent probability that rates will be at 1.25-1.50 percent, 37 percent probability that rates will be at 1.50-1.75 percent, 39.4 percent probability that rates will be at 1.75-2.00 percent, and 11.2 percent probability that rates will be at 2.00-2.25 percent.
The probability is suggesting,
- Since our last review a week ago, the probabilities have tightened on the back of stronger economic numbers from the United States.
- The market is pricing the possibility of a rate cut with 100 percent probability, compared to 100 percent last week.
- The market is pricing a second rate cut with 88.8 percent probability, compared to 90.3 percent a week ago, and 93.8 percent in the week before that.
- The market is also pricing a third rate cut in 2019 with 49.4 percent probability, compared to 53.6 percent a week ago, and 65 percent in the week before that.
- The first rate cut is priced in July 2019 with 100 percent probability. The second rate cut is priced in September with 71.7 percent probability.
