Bank of Japan Governor Signals Gradual Progress Toward 2% Inflation Target 
RBA Set for Back-to-Back Rate Hikes, Westpac Forecasts 
Global Central Banks Hold Rates Amid Iran War-Driven Energy Price Surge 
BOJ Holds Interest Rates Steady Amid Middle East Uncertainty 
China Holds Benchmark Loan Prime Rate Steady for Tenth Consecutive Month 
Gold Prices Fall Amid Rate Jitters; Copper Steady as China Stimulus Eyed 
ECB Eyes Rate Hike Amid Iran Conflict-Driven Energy Price Surge 
ANZ and Westpac Forecast Two RBA Rate Hikes in March and May 2026 
Bank of Japan Faces Rate Uncertainty Amid Middle East Oil Shock 
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 22nd July)
- July 2019 meeting: Market is attaching 22.5 percent probability that rates will be at 1.75-2.00 percent, and 77.5 percent probability that rates will be at 2.00-2.25 percent.
- September 2019 meeting: Market is attaching 15 percent probability that rates will be at 1.50-1.75 percent, 59.3 percent probability that rates will be at 1.75-2.00 percent, and 25.7 percent probability that rates will be at 2.25-2.50 percent.
- October 2019 meeting: Market is attaching 7.5 percent probability that rates will be at 1.25-1.50 percent, 37.3 percent probability that rates will be at 1.50-1.75 percent, 42.4 percent probability that rates will be at 1.75-2.00 percent, and 12.8 percent probability that rates will be at 2.00-2.25 percent.
- December 2019 meeting: Market is attaching 21.9 percent probability that rates will be at 1.25-1.50 percent, 39.2 percent probability that rates will be at 1.50-1.75 percent, 31 percent probability that rates will be at 1.75-2.00 percent, and 7.9 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 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 92.1 percent probability, compared to 89.6 percent a week ago, and 88.8 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 61.1 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 87.2 percent probability.
