Fed’s Goolsbee Warns Inflation Remains Elevated, Signals Caution on Rate Cuts 
RBA Raises Interest Rates to 4.35% Amid Rising Inflation Risks and Middle East Tensions 
ECB Signals Possible Interest Rate Move if Inflation Outlook Fails to Improve 
BOJ Rate Hike Expectations Grow as Board Member Signals Hawkish Stance 
DOJ Ends Probe Into Fed Chair Jerome Powell, Boosting Kevin Warsh Confirmation Prospects 
Gold Prices Fall Amid Rate Jitters; Copper Steady as China Stimulus Eyed 
ECB Rate Outlook: Ceasefire Eases Pressure but Hikes Still Expected in 2026 
Bank of Korea Signals Potential Interest Rate Hikes as Inflation Remains Elevated 
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 27th May)
- June 2019 meeting: Market is attaching 3.3 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 0.4 percent probability that rates will be at 1.75-2.00 percent, 14.9 percent probability that rates will be at 2.00-2.25 percent, and 84.7 percent probability that rates will be at 2.25-2.50 percent.
- September 2019 meeting: Market is attaching 5.2 percent probability that rates will be at 1.75-2.00 percent, 37.4 percent probability that rates will be at 2.00-2.25 percent, and 57.3 percent probability that rates will be at 2.25-2.50 percent.
- October 2019 meeting: Market is attaching 14 percent probability that rates will be at 1.75-2.00 percent, 42.1 percent probability that rates will be at 2.00-2.25 percent, and 43.8 percent probability that rates will be at 2.25-2.50 percent.
- December 2019 meeting: Market is attaching 6.6 percent probability that rates will be at 1.50-1.75 percent, 24.9 percent probability that rates will be at 1.75-2.00 percent, 42.8 percent probability that rates will be at 2.00-2.25 percent, and 25.7 percent probability that rates will be at 2.25-2.50 percent.
The probability is suggesting,
- Since our last review a week ago, the probabilities have significantly tightened for near month and eased for the December month, as some FOMC members hinting at rate cuts going ahead.
- The market is pricing the possibility of a rate cut with 74.3 percent probability, compared to 70.3 percent last week, and 57.3 percent in the week before that.
