The Federal Reserve Bank of Cleveland maintains an implied probability of FOMC meeting outcomes on thier site. This month shows a very high probability — about
97 98.5% — of no change in the Fed Funds rate.
Here’s the chart for the FOMC May meeting:
click for larger chart
The market is now pricing in less than a 5% chance of a cut at the June 28 FOMC meet and greet; August 7th we are looking at less than 20% chance of a cut.
When we look into the Fall, things begion to change: The September 18 meeting is between a 40% – 50% chance of a rate cut.
From the Cleveland fed site:
Options on federal funds futures can be
analyzed to extract public expectations of future Fed actions. The charts below
show what markets believe the most likely outcome of upcoming FOMC meetings will
be. The charts are updated every business day and reflect the most recent data
released by the Chicago Board of
Trade. Probabilities can be estimated with various assumptions, which are
described in detail here and in the readme
worksheet of the downloadable Excel file. The assumptions used to construct each
day’s charts are indicated immediately below the pictures.
Hat tip: Macroblog
Fed Funds Rate Predictions
Economic Research and Data Monetary Policy
The Federal Reserve Bank of Cleveland, May 8, 2007