After last week's data showed ongoing strength in the U.S. economy, there is a growing sentiment that the Fed will choose to raise the Fed Funds Rate before it begins lowering it.
FFR currently stands at 5.250% and here is what markets are predicting over the near-term:
After January 30-31 Meeting:
Decrease to 4.750: 0% probability
Decrease to 5.000: 4% probability
Remain at 5.250: 96% probability
Increase to 5.550: 0% probability
After March 20-21 Meeting:
Decrease to 4.750: 1% probability
Decrease to 5.000: 5% probability
Remain at 5.250: 91% probability
Increase to 5.550: 3% probability
After May 9 Meeting:
Decrease to 4.750: 3% probability
Decrease to 5.000: 20% probability
Remain at 5.250: 72% probability
Increase to 5.550: 5% probability
These predictions are important they give insight into how markets think the economy will grow over the next two quarters. A lower FFR would be indicative of a slowing economy and should cause mortgage rates to fall.
