China Holds Loan Prime Rates Steady in January as Market Expectations Align 
Fed Confirms Rate Meeting Schedule Despite Severe Winter Storm in Washington D.C. 
Bank of Korea Expected to Hold Interest Rates as Weak Won Limits Policy Easing 
Bank of England Expected to Hold Interest Rates at 3.75% as Inflation Remains Elevated 
RBA Deputy Governor Says November Inflation Slowdown Helpful but Still Above Target 
BOJ Rate Decision in Focus as Yen Weakness and Inflation Shape Market Outlook 
Bank of Japan Likely to Delay Rate Hike Until July as Economists Eye 1% by September 
ECB Signals Steady Interest Rates as Fed Risks Loom Over Outlook 
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 17th June)
- June 2019 meeting: Market is attaching 15.8 percent probability that rates will be at 2.00-2.25 percent, and 84.2 percent probability that rates will be at 2.25-2.50 percent.
- July 2019 meeting: Market is attaching 12.8 percent probability that rates will be at 1.75-2.00 percent, 70.9 percent probability that rates will be at 2.00-2.25 percent, and 16.3 percent probability that rates will be at 2.25-2.50 percent.
- September 2019 meeting: Market is attaching 9.4 percent probability that rates will be at 1.50-1.75 percent, 55.7 percent probability that rates will be at 1.75-2.00 percent, 30.6 percent probability that rates will be at 2.00-2.25 percent, and 4.3 percent probability that rates will be at 2.25-2.50 percent.
- October 2019 meeting: Market is attaching 29 percent probability that rates will be at 1.50-1.75 percent, 46.8 percent probability that rates will be at 1.75-2.00 percent, 21.3 percent probability that rates will be at 2.00-2.25 percent, and 2.8 percent probability that rates will be at 2.25-2.50 percent.
- December 2019 meeting: Market is attaching 51.9 percent probability that rates will be at 1.50-1.75 percent, 33.3 percent probability that rates will be at 1.75-2.00 percent, 11.5 percent probability that rates will be at 2.00-2.25 percent, and 1.3 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 tightened for both the near month and the far months, on the back of stronger retail sales data.
- The market is pricing the possibility of a rate cut with 98.7 percent probability, compared to 99.1 percent last week, and 90.5 percent in the week before that. The market is pricing a second rate cut with 87.2 percent probability, compared to 90.5 percent a week ago. The market is also pricing a third rate cut with 53.9 percent probability, compared to 61.9 percent a week ago.
