September 2016 U.S. Federal Reserve Rate Odds
Chart of the Week for September 23, 2016 - September 29, 2016
On September 21, 2016, the Federal Open Market Committee ("FOMC") of the U.S. Federal Reserve Board announced that the target rate range of the Federal Funds Rate ("Fed Funds") would remain unchanged. Target rate range changes are one of the most widely monitored economic indicators and expectations of a rate change can impact markets. The chart above shows the probabilities of an increase in the Fed Funds target rate range at the FOMC's September meeting, which is compiled by Bloomberg based on Fed Funds futures trading data.
The probability of a change can move rapidly based on domestic or global events. From January through April 2016, the predictions were generally in the range of a 40% chance of an increase in September. In May 2016, the probability spiked to 58%, but the Brexit vote in the United Kingdom in late June caused global economic concern and the prediction of a September increase fell to 0% at the end of June. By the end of July and August, the chances of an increase had risen to 18% and 36% respectively. Of course, the rate was not increased in September and the probability of a rate increase from the FOMC in December 2016 was 59% as of September 22, 2106.
Posted by: sarah_oz@yahoo.com
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