ECB’s Cipollone Backs Digital Euro as Europe Pushes for Payment System Independence 
BOJ Holds Interest Rates Steady, Upgrades Growth and Inflation Outlook for Japan 
RBA Expected to Raise Interest Rates by 25 Basis Points in February, ANZ Forecast Says 
Federal Reserve Faces Subpoena Delay Amid Investigation Into Chair Jerome Powell 
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 
Fed Governor Lisa Cook Warns Inflation Risks Remain as Rates Stay Steady 
FOMC followed through its promise and hiked rates four times in 2018 and forecasted two more rate hikes for 2019. Current Federal funds rate - 225-250 bps (Note, all calculations are based on data as of 18th February)
- March 2019 meeting: Market is attaching 1.3 percent probability that rates will be at 2.00-2.25 percent, and 98.7 percent probability that rates will be at 2.50-2.75 percent.
- May 2019 meeting: Market is attaching 3.2 percent probability that rates will be at 2.00-2.25 percent, and 3.3 percent probability that rates will be at 2.50-2.75 percent.
- June 2019 meeting: Market is attaching 3.2 percent probability that rates will be at 2.00-2.25 percent, and 96.7 percent probability that rates will be at 2.25-2.50 percent.
- July 2019 meeting: Market is attaching 3.2 percent probability that rates will be at 2.00-2.25 percent, 94.8 percent probability that rates will be at 2.25-2.50 percent, and 2 percent probability that rates will be at 2.50-2.75 percent.
- September 2019 meeting: Market is 3.2 percent probability that rates will be at 2.00-2.25 percent, 94.8 percent probability that rates will be at 2.25-2.50 percent, and 2 percent probability that rates will be at 2.25-2.50 percent.
- October 2019 meeting: Market is 3.2 percent probability that rates will be at 2.00-2.25 percent, 94.8 percent probability that rates will be at 2.25-2.50 percent, and 2 percent probability that rates will be at 2.50-2.75 percent.
- December 2019 meeting: Market is 11.6 percent probability that rates will be at 2.00-2.25 percent, 86.6 percent probability that rates will be at 2.25-2.50 percent, and 1.8 percent probability that rates will be at 2.50-2.75 percent.
The probability is suggesting,
- Since our last review a week ago, the probabilities have marginally tightened.
- The market is pricing just one rate hike for 2019 and that with just 1.8 percent probability, compared to a 0 percent a week ago and 4.1 percent in the week before that, which means that the market is far from pricing a rate hike in 2019, despite Fed’s forecast of two hikes.
- The market is now pricing a rate cut in 2019 with 11.6 percent probability, compared to 19.5 percent a week ago, and 8.4 percent probability, a week before that.
