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US Federal Reserve will be meeting on December 15th-16th, to decide on whether to hike rates or not. Market pricing of rate hike has somewhat softened after reaching as high as 84%. However hike expectations over next year for subsequent have firmed somewhat.
Let's look at the market pricing of hikes over next few meetings.
Current FED interest rate is at 0 - 0.25%.
- December, 2015 meeting - Market is attaching 28% probability that rates will remain 0 - 0.25% and 72% probability that rates will move to 0.25-0.5%.
- January, 2016 meeting - Market is attaching 23% probability that rates will remain 0 - 0.25% , 65% probability that rates will move to 0.25-0.5% and 12% probability that rates will be at 0.5-0.75%.
- March, 2016 meeting - Market is attaching 11% probability that rates will remain 0 - 0.25% , 38% probability that rates will move to 0.25-0.5%, 39% probability that rates will be at 0.5-0.75% and 6% probability that rates will be at 0.75-1%
- April, 2016 meeting - Market is attaching 9% probability that rates will remain 0 - 0.25% , 38% probability that rates will move to 0.25-0.5%, 40% probability that rates will be at 0.5-0.75%, 12% probability that rates will be at 0.75-1% and 1% probability that rates will be at 1-1.25%.
- June, 2016 meeting - Market is attaching 6% probability that rates will remain 0 - 0.25% , 28% probability that rates will move to 0.25-0.5%, 39% probability that rates will be at 0.5-0.75%, 21% probability that rates will be at 0.75-1% and 5% probability that rates will be at 1-1.25%.
