BOJ Hawk Signals Faster Interest Rate Hikes Amid Inflation Risks 
South Korea Signals Possible Interest Rate Hike as Inflation Remains Elevated 
China Keeps Loan Prime Rates Unchanged for 13th Straight Month as Policymakers Prioritize Credit Demand Recovery 
BOJ Raises Interest Rates to 1% as Inflation Pressures Persist 
ECB Keeps July Rate Options Open Amid Iran War Energy Price Risks 
RBI Hits Pause as Geopolitical Storm Clouds Gather 
Indonesia Plans Higher Asset Yields to Boost Rupiah and Restore Investor Confidence 
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 8.7 percent probability that rates will be at 1.50-1.75 percent, and 91.3 percent probability that rates will be at 1.75-2.00 percent.
- August 2018 meeting: Market is attaching 8.6 percent probability that rates will be at 1.50-1.75 percent, 89.6 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 percent.
- September 2018 meeting: Market is attaching 2.2 percent probability that rates will be at 1.50-1.75 percent, 29.3 percent probability that rates will be at 1.75-2.00 percent, 67.1 percent probability that rates will be at 2.00-2.25 percent, and 1.4 percent probability that rates will be at 2.25-2.50 percent.
- November 2018 meeting: Market is attaching 2 percent probability that rates will be at 1.50-1.75 percent, 27.2 percent probability that rates will be at 1.75-2.00 percent, 64.2 percent probability that rates will be at 2.00-2.25 percent, 6.5 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.
- December 2018 meeting: Market is attaching 1.1 percent probability that rates will be at 1.50-1.75 percent, 15.5 percent probability that rates will be at 1.75-2.00 percent, 47 percent probability that rates will be at 2.00-2.25 percent, 33.3 percent probability that rates will be at 2.25-2.50 percent, and 3.1 percent probability that rates will be at 2.50-2.75 percent.
- January 2019 meeting: Market is attaching 1 percent probability that rates will be at 1.50-1.75 percent, 14.4 percent probability that rates will be at 1.75-2.00 percent, 44.6 percent probability that rates will be at 2.00-2.25 percent, 34.3 percent probability that rates will be at 2.25-2.50 percent, and 5.3 percent probability that rates will be at 2.50-2.75 percent, and 0.3 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 both near month and far month but tightened for mid-month.
- Next hike is priced in June with 91.3 percent probability, instead of 92.5 percent a week ago.
- The market brought forwarded the third hike for 2018 in September and pricing it with 68.5 percent probability compared to 61.5 percent a week ago.
- The market is pricing the fourth hike in December with 36.4 percent probability instead of 38.5percent probability just a week ago.
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