BOJ’s Kazuo Ueda Signals Potential Interest Rate Hike as Economic Outlook Improves 
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Fed Meeting Sparks Division as Markets Brace for Possible Rate Cut 
FOMC increased interest rates again 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 2nd April)
- May 2018 meeting: Market is attaching 97.4 percent probability that rates will be at 1.50-1.75 percent, and 2.6 percent probability that rates will be at 1.75-2.00 percent.
- June 2018 meeting: Market is attaching 19.5 percent probability that rates will be at 1.50-1.75 percent, 78.4 percent probability that rates will be at 1.75-2.00 percent, and 2.1 percent probability that rates will be at 2.00-2.25.
- August 2018 meeting: Market is attaching 17.9 percent probability that rates will be at 1.50-1.75 percent, 73.7 percent probability that rates will be at 1.75-2.00 percent, 8.2 percent probability that rates will be at 2.00-2.25 percent, and 0.2 percent probability that rates will be at 2.25-2.50 percent.
- September 2018 meeting: Market is attaching 6.5 percent probability that rates will be at 1.50-1.75 percent, 38.2 percent probability that rates will be at 1.75-2.00 percent, 49.9 percent probability that rates will be at 2.00-2.25 percent, 5.3 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.
- November 2018 meeting: Market is attaching 5.9 percent probability that rates will be at 1.50-1.75 percent, 35.3 percent probability that rates will be at 1.75-2.00 percent, 48.8 percent probability that rates will be at 2.00-2.25 percent, 9.3 percent probability that rates will be at 2.25-2.50 percent, and 0.6 percent probability that rates will be at 2.50-2.75 percent.
- December 2018 meeting: Market is attaching 3.3 percent probability that rates will be at 1.50-1.75 percent, 22.2 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, 27 percent probability that rates will be at 2.25-2.50 percent, 4.5 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 eased somewhat.
- Next hike is priced in June with 80.5 percent probability, instead of 85.3 percent a week ago.
- The market brought forwarded the third hike for 2018 in September and pricing it with 55.3 percent probability compared to 58.9 percent a week ago.
- The market is pricing the fourth hike in December with 31.8 percent probability instead of 32.2 percent probability just a week ago.
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