ECB Set to Raise Interest Rates as Energy Shock Fuels Eurozone Inflation Concerns 
New Zealand Unemployment and Inflation Debate Intensifies Ahead of 2026 Election 
China Keeps Loan Prime Rates Unchanged for 13th Straight Month as Policymakers Prioritize Credit Demand Recovery 
BOJ Rate Hike Expectations Rise as Weak Yen and Strong U.S. Jobs Data Increase Pressure 
South Korea Signals Possible Interest Rate Hike as Inflation Remains Elevated 
BOJ Raises Interest Rates to 1% as Inflation Pressures Persist 
RBA Expected to Hold Interest Rates at 4.35% as Markets Watch AUD/USD and ASX 200 
FOMC increased interest rates again in March and maintained its forecast for three rate hikes in 2018. FOMC also forecasted a faster pace of hikes next year than previously forecasted. March decision was unanimous. Current Federal funds rate - 150-175 bps (Note, all calculations are based on data as of 26th March)
- May 2018 meeting: Market is attaching 97.9 percent probability that rates will be at 1.50-1.75 percent, and 2.1 percent probability that rates will be at 1.75-2.00 percent.
- June 2018 meeting: Market is attaching 14.7 percent probability that rates will be at 1.50-1.75 percent, 83.6 percent probability that rates will be at 1.75-2.00 percent, and 1.8 percent probability that rates will be at 2.00-2.25.
- August 2018 meeting: Market is attaching 14 percent probability that rates will be at 1.50-1.75 percent, 80.1 percent probability that rates will be at 1.75-2.00 percent, 5.8 percent probability that rates will be at 2.00-2.25 percent, and 0.1 percent probability that rates will be at 2.25-2.50 percent.
- September 2018 meeting: Market is attaching 4.7 percent probability that rates will be at 1.50-1.75 percent, 36.4 percent probability that rates will be at 1.75-2.00 percent, 54.9 percent probability that rates will be at 2.00-2.25 percent, 3.9 percent probability that rates will be at 2.25-2.50 percent, and 0.1 percent probability that rates will be at 2.50-2.75 percent.
- November 2018 meeting: Market is attaching 4.4 percent probability that rates will be at 1.50-1.75 percent, 34 percent probability that rates will be at 1.75-2.00 percent, 53.4 percent probability that rates will be at 2.00-2.25 percent, 7.9 percent probability that rates will be at 2.25-2.50 percent, and 0.4 percent probability that rates will be at 2.50-2.75 percent.
- December 2018 meeting: Market is attaching 2.4 percent probability that rates will be at 1.50-1.75 percent, 20.7 percent probability that rates will be at 1.75-2.00 percent, 44.7 percent probability that rates will be at 2.00-2.25 percent, 28.3 percent probability that rates will be at 2.25-2.50 percent, 3.7 percent probability that rates will be at 2.50-2.75 percent, and 0.2 percent probability that rates will be at 2.75-3.00 percent.
The probability is suggesting,
- Since our last review a week ago, the probability tightened in favor of rate hikes.
- Next hike is priced in June with 85.3 percent probability, instead of 77 percent a week ago.
- The market brought forwarded the third hike for 2018 in September and pricing it with 58.9 percent probability compared to 55.9 percent a week ago.
- The market is pricing the fourth hike in December with 32.2 percent probability instead of 26.9 percent probability just a week ago.
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