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 
BOJ Raises Interest Rates to 1% as Inflation Pressures Persist 
Indonesia Plans Higher Asset Yields to Boost Rupiah and Restore Investor Confidence 
BOJ Hawk Signals Faster Interest Rate Hikes Amid Inflation Risks 
ECB Set to Raise Interest Rates as Energy Shock Fuels Eurozone Inflation Concerns 
New Zealand Unemployment and Inflation Debate Intensifies Ahead of 2026 Election 
South Korea Signals Possible Interest Rate Hike as Inflation Remains Elevated 
Japan Signals Preference for Low Interest Rates as BOJ Policy Debate Intensifies 
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 3rd September)
- September 2018 meeting: Market is attaching 1.6 percent probability that rates will be at 1.75-2.00 percent, and 98.4 percent probability that rates will be at 2.00-2.25 percent.
- November 2018 meeting: Market is attaching 1.6 percent probability that rates will be at 1.75-2.00 percent, and 98.4 percent probability that rates will be at 2.00-2.25 percent.
- December 2018 meeting: Market is attaching 0.4 percent probability that rates will be at 1.75-2.00 percent, 28.4 percent probability that rates will be at 2.00-2.25 percent, and 71.2 percent probability that rates will be at 2.25-2.50 percent.
- January 2019 meeting: Market is attaching 0.4 percent probability that rates will be at 1.75-2.00 percent, 27.2 percent probability that rates will be at 2.00-2.25 percent, 69.3 percent probability that rates will be at 2.25-2.50 percent, and 3 percent probability that rates will be at 2.50-2.75 percent.
- March 2019 meeting: Market is attaching 0.2 percent probability that rates will be at 1.75-2.00 percent, 13.4 percent probability that rates will be at 2.00-2.25 percent, 47.6 percent probability that rates will be at 2.25-2.50 percent, and 37.3 percent probability that rates will be at 2.50-2.75 percent, and 1.6 percent probability that rates will be at 2.75-3.00 percent.
- May 2019 meeting: Market is attaching 0.2 percent probability that rates will be at 1.75-2.00 percent, 11.8 percent probability that rates will be at 2.00-2.25 percent, 43.5 percent probability that rates will be at 2.25-2.50 percent, and 38.5 percent probability that rates will be at 2.50-2.75 percent, and 6.1 percent probability that rates will be at 2.75-3.00 percent.
- June 2019 meeting: Market is attaching 0.1 percent probability that rates will be at 1.75-2.00 percent, 8.3 percent probability that rates will be at 2.00-2.25 percent, 34 percent probability that rates will be at 2.25-2.50 percent, and 40 percent probability that rates will be at 2.50-2.75 percent, 15.7 percent probability that rates will be at 2.75-3.00 percent, 2 percent probability that rates will be at 3.00-3.25 percent.
The probability is suggesting,
- Since our last review a week ago, the probabilities have tightened.
- The market is pricing the third hike for 2018 in September and pricing it with 98.4 percent probability, up from 96 percent a week ago.
- The market is pricing the fourth hike in December with 71.2 percent probability compared to 66.1 percent a week ago.
- The first rate hike of 2019 is priced in June with 59.7 percent probability, instead of 57.4 percent probability just a week ago.
