Dot Plot and rate hike odds 36 hours to March 2018 FOMC meeting
I am going to pin these screencaps taken off CME FedWatch tool for record keeping. After the coming meeting (preferably at least 24 hours after), we can come back for a before-after comparison. This is a quick and easy way to ‘check’ if any substantial change comes out of the meeting based on market’s reaction or non-reaction.
The above table shows 91.6% probability of a 25 basis point rate hike at the moment. This is very close to certainty and therefore ‘expected’ and ‘not surprising’. Dot Plot below shows FOMC participants’ projection of future rates. With a new chairman on board, this could be a time for change.
In my opinion, there could be three surprise outcomes from this meeting:
- No hike comes out of this meeting – only 8.4% probability and therefore would be a surprise.
- 50 basis point or more hike – zero probability at moment and therefore would be quite a shock.
- 25 basis point hike which at 91.6% probability is highly expected but in conjunction with a new Dot Plot that paints a lower trajectory for rate growth (lowers probabilities of future hikes).