FOMC Fed Day 18 Sep 2007

The next FOMC interest rate announcement will be on the 18 September 2007.

More details and charts about Fed Days

CBOT Fed Watch

In advance of next week's Federal Open Market Committee meeting on September 18, the CME Group will be reporting daily rate change probabilities in the FOMC's federal funds target rate, as indicated by the 30-Day Federal Funds futures contract. The 30-Day Federal Funds futures contract is a key benchmark interest rate barometer that reflects the forward overnight effective rate for excess reserves that are traded among commercial banks in the U.S. federal funds market.

Based upon the September 14 market close, the 30-Day Federal Funds futures contract for the October 2007 expiration is currently pricing in a 100 percent probability that the FOMC will decrease the target rate by at least 25 basis points from 5-1/4 percent to 5 percent at the FOMC meeting on September 18.

In addition, the 30-Day Federal Funds futures contract is pricing in a 58 percent probability of a further 25-basis point decrease in the target rate to 4-3/4 percent (versus a 42 percent probability of just a 25-basis point rate decrease).

Summary Table
September 11: 28% for -25 bps versus 72% for -50 bps.
September 12: 26% for -25 bps versus 74% for -50 bps.
September 13: 42% for -25 bps versus 58% for -50 bps.
September 14: 42% for -25 bps versus 58% for -50 bps.
September 17: 50% for -25 bps versus 50% for -50 bps.
September 18: FOMC decision on federal funds target rate.

FOMC Update: Odds are 50% that we see a 0.25% drop and 50% that the Fed cuts the rate by 0.50%. This is probably going to make for a very volatile trading session tomorrow.

Good luck and be careful.

Release Date: September 18, 2007

The Federal Open Market Committee decided today to lower its target for the federal funds rate 50 basis points to 4-3/4 percent.

Economic growth was moderate during the first half of the year, but the tightening of credit conditions has the potential to intensify the housing correction and to restrain economic growth more generally. Today’s action is intended to help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and to promote moderate growth over time.

Readings on core inflation have improved modestly this year. However, the Committee judges that some inflation risks remain, and it will continue to monitor inflation developments carefully.

Developments in financial markets since the Committee’s last regular meeting have increased the uncertainty surrounding the economic outlook. The Committee will continue to assess the effects of these and other developments on economic prospects and will act as needed to foster price stability and sustainable economic growth.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Charles L. Evans; Thomas M. Hoenig; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; William Poole; Eric Rosengren; and Kevin M. Warsh.

In a related action, the Board of Governors unanimously approved a 50-basis-point decrease in the discount rate to 5-1/4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Cleveland, St. Louis, Minneapolis, Kansas City, and San Francisco.

The 5 minute E-mini S&P500 Future Chart for this day: