Federal Reserve Probes Big Banks Over Private Credit Exposure Amid Growing Systemic Risk Concerns 
Bank of Japan Signals Potential Rate Hike as Inflation Risks Rise Amid Energy Shock 
Bank of Korea Nominee Shin Hyun-song Signals Possible Rate Hike Amid Middle East Inflation Fears 
RBA's Hauser Flags Uncertainty on Rate Settings Amid Iran War Economic Risks 
Bank of Japan Governor Signals Accommodative Stance Amid Negative Real Rates 
RBNZ Holds Rates at 2.25% as Middle East Conflict Fuels Inflation Concerns 
Bank of Japan Signals Rate Flexibility Amid Yen Volatility 
RBI Clamps Down on Rupee NDF Activity, Banks Face Steeper Losses 
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 16th April)
- May 2018 meeting: Market is attaching 98.5 percent probability that rates will be at 1.50-1.75 percent, and 1.5 percent probability that rates will be at 1.75-2.00 percent.
- June 2018 meeting: Market is attaching 98.4 percent probability that rates will be at 1.75-2.00 percent, and 1.6 percent probability that rates will be at 2.00-2.25.
- August 2018 meeting: Market is attaching 92.5 percent probability that rates will be at 1.75-2.00 percent, and 7.5 percent probability that rates will be at 2.00-2.25 percent.
- September 2018 meeting: Market is attaching 19.2 percent probability that rates will be at 1.75-2.00 percent, 74.8 percent probability that rates will be at 2.00-2.25 percent, and 6 percent probability that rates will be at 2.25-2.50 percent.
- November 2018 meeting: Market is attaching 16.7 percent probability that rates will be at 1.75-2.00 percent, 67.6 percent probability that rates will be at 2.00-2.25 percent, 14.8 percent probability that rates will be at 2.25-2.50 percent, and 0.8 percent probability that rates will be at 2.50-2.75 percent.
- December 2018 meeting: Market is attaching 8.7 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, 40.3 percent probability that rates will be at 2.25-2.50 percent, 7.6 percent probability that rates will be at 2.50-2.75 percent, and 0.4 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 has changed only marginally for near month and tightened sharply for far months.
- Next hike is priced in June with 98.4 percent probability, instead of 99.5 percent a week ago.
- The market brought forwarded the third hike for 2018 in September and pricing it with 80.2 percent probability compared to 70.4 percent a week ago.
- The market is pricing a fourth hike in December with 48.3 percent probability instead of 37.7 percent probability just a week ago.
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