South Africa Eyes ECB Repo Lines as Inflation Eases and Rate Cuts Loom 
MAS Holds Monetary Policy Steady as Strong Growth Raises Inflation Risks 
Fed Governor Lisa Cook Warns Inflation Risks Remain as Rates Stay Steady 
BOJ Rate Decision in Focus as Yen Weakness and Inflation Shape Market Outlook 
Bank of England Expected to Hold Interest Rates at 3.75% as Inflation Remains Elevated 
RBA Raises Interest Rates by 25 Basis Points as Inflation Pressures Persist 
FOMC increased interest rates in March, June and in September. Increased its forecast from three rate hikes in 2018 to four rate hikes. September decision was unanimous. Current Federal funds rate - 200-225 bps (Note, all calculations are based on data as of 19th November)
- December 2018 meeting: Market is attaching 27.7 percent probability that rates will be at 2.00-2.25 percent, and, 72.3 percent probability that rates will be at 2.25-2.50 percent.
- January 2019 meeting: Market is attaching 26.5 percent probability that rates will be at 2.00-2.25 percent, 70.4 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.
- March 2019 meeting: Market is attaching 12.8 percent probability that rates will be at 2.00-2.25 percent, 47.7 percent probability that rates will be at 2.25-2.50 percent, and 37.9 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 11.5 percent probability that rates will be at 2.00-2.25 percent, 44.2 percent probability that rates will be at 2.25-2.50 percent, and 38.9 percent probability that rates will be at 2.50-2.75 percent, and 5.4 percent probability that rates will be at 2.75-3.00 percent.
- June 2019 meeting: Market is attaching 7.5 percent probability that rates will be at 2.00-2.25 percent, 32.8 percent probability that rates will be at 2.25-2.50 percent, and 40.7 percent probability that rates will be at 2.50-2.75 percent, 17 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.
- July 2019 meeting: Market is attaching 6.7 percent probability that rates will be at 2.00-2.25 percent, 30.2 percent probability that rates will be at 2.25-2.50 percent, and 39.9 percent probability that rates will be at 2.50-2.75 percent, 19.5 percent probability that rates will be at 2.75-3.00 percent, 3.5 percent probability that rates will be at 3.00-3.25 percent, and 0.2 percent probability that rates will be at 3.25-3.50 percent.
- September 2019 meeting: Market is attaching 5.5 percent probability that rates will be at 2.00-2.25 percent, 25.8 percent probability that rates will be at 2.25-2.50 percent, and 38.1 percent probability that rates will be at 2.50-2.75 percent, 23.2 percent probability that rates will be at 2.75-3.00 percent, 6.4 percent probability that rates will be at 3.00-3.25 percent, and 0.9 percent probability that rates will be at 3.25-3.50 percent.
- October 2019 meeting: Market is attaching 5 percent probability that rates will be at 2.00-2.25 percent, 24.1 percent probability that rates will be at 2.25-2.50 percent, and 37.1 percent probability that rates will be at 2.50-2.75 percent, 24.5 percent probability that rates will be at 2.75-3.00 percent, 7.9 percent probability that rates will be at 3.00-3.25 percent, and 1.4 percent probability that rates will be at 3.25-3.50 percent.
The probability is suggesting,
- Since our last review a week ago, the probabilities have significantly eased.
- The market is pricing the fourth hike in December with 72.3 percent probability compared to 75.8 percent a week ago.
- The first rate hike of 2019 is priced in March with 39.5 percent probability, compared to 53.6 percent a week ago.
- The second hike for 2019 is now priced in September with a 30.5 percent probability, compared to 50.5 percent a week ago.
