Japan Declines Comment on BOJ’s Absence From Global Support Statement for Fed Chair Powell. Source: Asturio Cantabrio, CC BY-SA 4.0, via Wikimedia Commons 
Markets React as Tensions Rise Between White House and Federal Reserve Over Interest Rate Pressure 
RBA Expected to Raise Interest Rates by 25 Basis Points in February, ANZ Forecast Says 
U.S. Prosecutors Investigate Fed Chair Jerome Powell Over Headquarters Renovation 
China Holds Loan Prime Rates Steady in January as Market Expectations Align 
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.
