BOJ Raises Interest Rates to 1% as Inflation Pressures Persist 
Japan Signals Surprise Yen Intervention Strategy as BOJ Hawkish Stance Puts FX Traders on Alert 
Goldman Sachs Sees Fed Holding Interest Rates Steady Until 2027 
China Sets 1.25% Overnight Reverse Repo Rate Below Market Expectations 
Indonesia Plans Higher Asset Yields to Boost Rupiah and Restore Investor Confidence 
New Zealand Unemployment and Inflation Debate Intensifies Ahead of 2026 Election 
BOJ Rate Hike Expected to Boost Yen, Impact USD/JPY and Nikkei 
ECB Set to Raise Interest Rates as Energy Shock Fuels Eurozone Inflation Concerns 
FOMC increased interest rates in March and June and increased its forecast from three rate hikes in 2018 to four rate hikes. June decision was unanimous. Current Federal funds rate - 175-200 bps (Note, all calculations are based on data as of 30th July)
- August 2018 meeting: Market is attaching 97 percent probability that rates will be at 1.75-2.00 percent, and 3 percent probability that rates will be at 2.00-2.25 percent.
- September 2018 meeting: Market is attaching 8.5 percent probability that rates will be at 1.75-2.00 percent, 88.7 percent probability that rates will be at 2.00-2.25 percent, and 2.7 percent probability that rates will be at 2.25-2.50 percent.
- November 2018 meeting: Market is attaching 8.1 percent probability that rates will be at 1.75-2.00 percent, 84.5 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.
- December 2018 meeting: Market is attaching 2.2 percent probability that rates will be at 1.75-2.00 percent, 29.2 percent probability that rates will be at 2.00-2.25 percent, 63.2 percent probability that rates will be at 2.25-2.50 percent, and 5.4 percent probability that rates will be at 2.50-2.75 percent.
- January 2019 meeting: Market is attaching 2 percent probability that rates will be at 1.75-2.00 percent, 26.6 percent probability that rates will be at 2.00-2.25 percent, 59.9 percent probability that rates will be at 2.25-2.50 percent, and 10.8 percent probability that rates will be at 2.50-2.75 percent, and 0.6 percent probability that rates will be at 2.75-3.00 percent.
The probability is suggesting,
- Since our last review a week ago, the probabilities have tightened for near and far months.
- The market is pricing the third hike for 2018 in September and pricing it with 97.3 percent probability compared to 85.7 percent a week ago.
- The market is pricing the fourth hike in December with 68.6 percent probability instead of 60.3 percent probability just a week ago.
