U.S. Prosecutors Investigate Fed Chair Jerome Powell Over Headquarters Renovation 
BOJ Policymakers Warn Weak Yen Could Fuel Inflation Risks and Delay Rate Action 
China Holds Loan Prime Rates Steady in January as Market Expectations Align 
ECB’s Cipollone Backs Digital Euro as Europe Pushes for Payment System Independence 
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 9th April)
- May 2018 meeting: Market is attaching 98.4 percent probability that rates will be at 1.50-1.75 percent, and 1.6 percent probability that rates will be at 1.75-2.00 percent.
- June 2018 meeting: Market is attaching 14.8 percent probability that rates will be at 1.50-1.75 percent, 83.9 percent probability that rates will be at 1.75-2.00 percent, and 1.3 percent probability that rates will be at 2.00-2.25.
- August 2018 meeting: Market is attaching 13.9 percent probability that rates will be at 1.50-1.75 percent, 79.8 percent probability that rates will be at 1.75-2.00 percent, 6.3 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 7.5 percent probability that rates will be at 1.50-1.75 percent, 41.3 percent probability that rates will be at 1.75-2.00 percent, 46.8 percent probability that rates will be at 2.00-2.25 percent, 4.4 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 6.8 percent probability that rates will be at 1.50-1.75 percent, 38.2 percent probability that rates will be at 1.75-2.00 percent, 46.3 percent probability that rates will be at 2.00-2.25 percent, 8.3 percent probability that rates will be at 2.25-2.50 percent, and 0.5 percent probability that rates will be at 2.50-2.75 percent.
- December 2018 meeting: Market is attaching 4.1 percent probability that rates will be at 1.50-1.75 percent, 25.7 percent probability that rates will be at 1.75-2.00 percent, 43.1 percent probability that rates will be at 2.00-2.25 percent, 23.3 percent probability that rates will be at 2.25-2.50 percent, 3.6 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 for near month and eased for far months.
- Next hike is priced in June with 85.2 percent probability, instead of 80.5 percent a week ago.
- The market brought forwarded the third hike for 2018 in September and pricing it with 51.3 percent probability compared to 55.3 percent a week ago.
- The market is pricing the fourth hike in December with 27.1 percent probability instead of 31.8 percent probability just a week ago.
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