BOJ Signals Possible December Rate Hike as Yen Weakness Raises Inflation Risks 
Fed Officials Split as Powell Weighs December Interest Rate Cut 
FxWirePro: Daily Commodity Tracker - 21st March, 2022 
BOJ’s Noguchi Calls for Cautious, Gradual Interest Rate Hikes to Sustain Inflation Goals 
Fed Rate Cut Odds Rise as December Decision Looks Increasingly Divided 
Brazil Central Bank Plans $2 Billion Dollar Auctions to Support FX Liquidity 
RBNZ Cuts Interest Rates Again as Inflation Cools and Recovery Remains Fragile 
FOMC increased interest rates in March and June and increased its forecast from three rate hikes in 2018 to four rate hikes. June decision was unanimous. Current Federal funds rate - 175-200 bps (Note, all calculations are based on data as of 10th September)
- September 2018 meeting: Market is attaching 1.6 percent probability that rates will be at 1.75-2.00 percent, and 98.4 percent probability that rates will be at 2.00-2.25 percent.
- November 2018 meeting: Market is attaching 1.5 percent probability that rates will be at 1.75-2.00 percent, 93.3 percent probability that rates will be at 2.00-2.25 percent, and 5.1 percent probability that rates will be at 2.25-2.50 percent.
- December 2018 meeting: Market is attaching 0.3 percent probability that rates will be at 1.75-2.00 percent, 20.6 percent probability that rates will be at 2.00-2.25 percent, 75 percent probability that rates will be at 2.25-2.50 percent, and 4.1 percent probability that rates will be at 2.50-2.75 percent.
- January 2019 meeting: Market is attaching 0.3 percent probability that rates will be at 1.75-2.00 percent, 19.7 percent probability that rates will be at 2.00-2.25 percent, 72.7 percent probability that rates will be at 2.25-2.50 percent, and 7.3 percent probability that rates will be at 2.50-2.75 percent.
- March 2019 meeting: Market is attaching 0.1 percent probability that rates will be at 1.75-2.00 percent, 8.7 percent probability that rates will be at 2.00-2.25 percent, 42.6 percent probability that rates will be at 2.25-2.50 percent, and 44.4 percent probability that rates will be at 2.50-2.75 percent, and 4.2 percent probability that rates will be at 2.75-3.00 percent.
- May 2019 meeting: Market is attaching 0.1 percent probability that rates will be at 1.75-2.00 percent, 7.7 percent probability that rates will be at 2.00-2.25 percent, 38.5 percent probability that rates will be at 2.25-2.50 percent, and 44.2 percent probability that rates will be at 2.50-2.75 percent, and 9.5 percent probability that rates will be at 2.75-3.00 percent.
- June 2019 meeting: Market is attaching 0.1 percent probability that rates will be at 1.75-2.00 percent, 4.9 percent probability that rates will be at 2.00-2.25 percent, 27.2 percent probability that rates will be at 2.25-2.50 percent, and 42.1 percent probability that rates will be at 2.50-2.75 percent, 21.9 percent probability that rates will be at 2.75-3.00 percent, 3.8 percent probability that rates will be at 3.00-3.25 percent.
The probability is suggesting,
- Since our last review a week ago, the probabilities have tightened.
- The market is pricing the third hike for 2018 in September and pricing it with 98.4 percent probability, same as a week ago.
- The market is pricing the fourth hike in December with 79.1 percent probability compared to 71.2 percent a week ago.
- The first rate hike of 2019 is priced in June with 67.8 percent probability, instead of 59.7 percent probability just a week ago.
