Japan Signals Preference for Low Interest Rates as BOJ Policy Debate Intensifies 
ECB Set to Raise Interest Rates as Energy Shock Fuels Eurozone Inflation Concerns 
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 
New Zealand Unemployment and Inflation Debate Intensifies Ahead of 2026 Election 
Japan Signals Surprise Yen Intervention Strategy as BOJ Hawkish Stance Puts FX Traders on Alert 
Taiwan Central Bank Likely to Keep Interest Rates Unchanged Through 2027 
FOMC increased interest rates 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 14th May)
- June 2018 meeting: Market is attaching 95 percent probability that rates will be at 1.75-2.00 percent, and 5 percent probability that rates will be at 2.00-2.25 percent.
- August 2018 meeting: Market is attaching 91.2 percent probability that rates will be at 1.75-2.00 percent, and 8.8 percent probability that rates will be at 2.00-2.25 percent.
- September 2018 meeting: Market is attaching 16.8 percent probability that rates will be at 1.75-2.00 percent, 76 percent probability that rates will be at 2.00-2.25 percent, and 7.3 percent probability that rates will be at 2.25-2.50 percent.
- November 2018 meeting: Market is attaching 15.2 percent probability that rates will be at 1.75-2.00 percent, 70.6 percent probability that rates will be at 2.00-2.25 percent, 13.3 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 6.8 percent probability that rates will be at 1.75-2.00 percent, 40.1 percent probability that rates will be at 2.00-2.25 percent, 44.9 percent probability that rates will be at 2.25-2.50 percent, 7.7 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.
- January 2019 meeting: Market is attaching 6.1 percent probability that rates will be at 1.75-2.00 percent, 36.5 percent probability that rates will be at 2.00-2.25 percent, 44.4 percent probability that rates will be at 2.25-2.50 percent, 11.7 percent probability that rates will be at 2.50-2.75 percent, and 1.3 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 eased for near month and tightened for far months.
- Next hike is priced in June with 95 percent probability, instead of 100 percent a week ago.
- The market brought forwarded the third hike for 2018 in September and pricing it with 83.3 percent probability compared to 78.2 percent a week ago.
- The market is pricing the fourth hike in December with 53 percent probability instead of 47.4 percent probability just a week ago.
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