ECB Keeps July Rate Options Open Amid Iran War Energy Price Risks 
Goldman Sachs Sees Fed Holding Interest Rates Steady Until 2027 
RBA Minutes Signal Australia Central Bank Remains Ready to Raise Interest Rates if Inflation Persists 
BOJ Raises Interest Rates to 1% as Inflation Pressures Persist 
BOJ Raises Interest Rates to 31-Year High, Signals Strong Focus on Inflation Risks 
Indonesia Plans Higher Asset Yields to Boost Rupiah and Restore Investor Confidence 
China Keeps Loan Prime Rates Unchanged for 13th Straight Month as Policymakers Prioritize Credit Demand Recovery 
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 15th July)
- July 2019 meeting: Market is attaching 25.6 percent probability that rates will be at 1.75-2.00 percent, and 74.4 percent probability that rates will be at 2.00-2.25 percent.
- September 2019 meeting: Market is attaching 15.3 percent probability that rates will be at 1.50-1.75 percent, 54.9 percent probability that rates will be at 1.75-2.00 percent, and 29.8 percent probability that rates will be at 2.25-2.50 percent.
- October 2019 meeting: Market is attaching 6.2 percent probability that rates will be at 1.25-1.50 percent, 31.4 percent probability that rates will be at 1.50-1.75 percent, 44.7 percent probability that rates will be at 1.75-2.00 percent, and 17.7 percent probability that rates will be at 2.00-2.25 percent.
- December 2019 meeting: Market is attaching 17.3 percent probability that rates will be at 1.25-1.50 percent, 36.1 percent probability that rates will be at 1.50-1.75 percent, 35.1 percent probability that rates will be at 1.75-2.00 percent, and 11.4 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 eased on the back of several Fed speakers signaling rate cuts.
- 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 89.6 percent probability, compared to 88.8 percent a week ago, and 90.3 percent in the week before that.
- The market is also pricing a third rate cut in 2019 with 53.5 percent probability, compared to 49.4 percent a week ago, and 53.6 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 October with 82.3 percent probability.
