BOJ’s Noguchi Calls for Cautious, Gradual Interest Rate Hikes to Sustain Inflation Goals 
Fed Meeting Sparks Division as Markets Brace for Possible Rate Cut 
RBI Cuts Repo Rate to 5.25% as Inflation Cools and Growth Outlook Strengthens 
BOJ Governor Ueda Highlights Uncertainty Over Future Interest Rate Hikes 
Fed Rate Cut Odds Rise as December Decision Looks Increasingly Divided 
RBA Reassesses Pricing Behaviors and Policy Impact Amid Inflation Pressures 
Fed Officials Split as Powell Weighs December Interest Rate Cut 
BOK Expected to Hold Rates at 2.50% as Housing and Currency Pressures Persist 
FOMC increased interest rates in March and maintained its forecast for three rate hikes in 2018. FOMC also forecasted a faster pace of hikes next year than previously forecasted. March decision was unanimous. Current Federal funds rate - 150-175 bps (Note, all calculations are based on data as of 11th June)
- June 2018 meeting: Market is attaching 8.7 percent probability that rates will be at 1.50-1.75 percent, and 91.3 percent probability that rates will be at 1.75-2.00 percent.
- August 2018 meeting: Market is attaching 8.6 percent probability that rates will be at 1.50-1.75 percent, 89.6 percent probability that rates will be at 1.75-2.00 percent, and 1.8 percent probability that rates will be at 2.00-2.25 percent.
- September 2018 meeting: Market is attaching 2.3 percent probability that rates will be at 1.50-1.75 percent, 30.3 percent probability that rates will be at 1.75-2.00 percent, 66.1 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.
- November 2018 meeting: Market is attaching 2.1 percent probability that rates will be at 1.50-1.75 percent, 27.5 percent probability that rates will be at 1.75-2.00 percent, 64.7 percent probability that rates will be at 2.00-2.25 percent, 5.6 percent probability that rates will be at 2.25-2.50 percent, and 0.1 percent probability that rates will be at 2.50-2.75 percent.
- December 2018 meeting: Market is attaching 0.9 percent probability that rates will be at 1.50-1.75 percent, 13.5 percent probability that rates will be at 1.75-2.00 percent, 44.2 percent probability that rates will be at 2.00-2.25 percent, 38.2 percent probability that rates will be at 2.25-2.50 percent, and 3.2 percent probability that rates will be at 2.50-2.75 percent.
- January 2019 meeting: Market is attaching 0.8 percent probability that rates will be at 1.50-1.75 percent, 12.4 percent probability that rates will be at 1.75-2.00 percent, 41.6 percent probability that rates will be at 2.00-2.25 percent, 38.7 percent probability that rates will be at 2.25-2.50 percent, and 6.1 percent probability that rates will be at 2.50-2.75 percent, and 0.3 percent probability that rates will be at 2.75-3.00 percent.
The probability is suggesting,
- Since our last review a week ago, the probability has not changed much.
- Next hike is priced in June with 91.3 percent probability, same as a week ago.
- The market brought forwarded the third hike for 2018 in September and pricing it with 67.4 percent probability compared to 68.5 percent a week ago.
- The market is pricing the fourth hike in December with 41.4 percent probability instead of 36.4 percent probability just a week ago.
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