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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.

Director, TerraSeeds Market Technician Pte Ltd. Trader, investor. @sohtionghum was picked ‘Top 70 Forex Twitter in 2015’. Operates multiple strategies.

“Dear reader, I do not have a financial license to give advice. I do not know you the reader. Your financial objective and risk tolerance may be different from mine. I am not responsible for any consequence of your action.

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