9 ways to see a Fed rate hike in the next 12 months

With 7 more days to go to the last FOMC meeting of 2017, most analysts see a rate hike as a certainty. Are there other ways to look at this?

7 days to go, probabilities of a Fed rate hike according to CME FedWatch Tool

7 days to go, probabilities of a Fed rate hike according to CME FedWatch Tool


Based on probabilities at this instance, these 9 statements are equally valid:

  1. Rate hike on 13 December 2017 is a near certainty (90.2%).
  2. If Fed doesn’t hike in December, it will near certainly hike in January (88.3%).
  3. There is only 0.25 hike between the next two meetings; the probability of a 0.50 hike is low (11.5%).
  4. If Fed hikes next week, there won’t be a hike in January (11.5% probability of second hike).
  5. Fed will continue to hike in 2018 (positive odds).
  6. The odds of a hike in 2018 (after the coming one) is at best 50.5% or none.
  7. The coming hike could be the last one.
  8. Fed could hike until 1.75 – 2.00 percent (positive odds).
  9. The Fed could cut rates in 2018 (positive odds).

Although policy makers want to emphasise that they will continue to hike rates because the economy is good, a trader could also see the economy as not good since:

  1. this hike could be the last as odds of another is 50:50 and
  2. odds of a rate cut could not be eliminated.
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Soh Tiong Hum is Director of TerraSeeds Market Technician Pte Ltd. TerraSeeds is a trading educator in Singapore since 2005.   Soh's Twitter account @sohtionghum was ranked #23 out of The Top 70 Twitter Accounts To Follow In 2015 by MahiFX.   Disclaimer notice: "I do not have a financial advisor's license. I am not qualified by any regulator to give financial advice. I do not know you the reader. Your investment means and motive may be different from me. My posts here are based on observations and meant for education. I am not responsible for for any consequence from your actions."
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