Fed Rate Monitor Tool Tells You What to Expect from FOMC Decisions
What's New | Aug 01, 2016 06:30AM ET
We’re excited to announce the launch of a handy, yet sophisticated tool – the Fed Rate Monitor – that calculates the expectations for rate hike changes.
Every one to two months, the Federal Open Market Committee (FOMC) – the governing body responsible for US monetary policy – meets to analyze the US and global economies and decide whether to raise, lower, or hold, interest rates. Their decisions often have quite a big effect on global markets and any trader is liable to be exposed if caught unprepared. But now, traders can use our tool to quickly familiarize themselves with market expectations and plan their speculative/futures trades accordingly.
You can access the tool by navigating from the main menu to Tools > Fed Rate Monitor Tool.
Here’s how the tool looks:
At the top of the page is the countdown to the next Fed interest rate decision. Traders can use the orange Create Alert icon in the top-right corner to send themselves a reminder ahead of the event.
Next comes the section describing the expectations of the Fed’s decision, which is calculated based on the prices of 30-day Fed Fund Futures.
In the example below, the next futures contract price is 99.310, and based on the tool’s internal calculation, that leaves an 82.3% chance of the interest rate holding steady at 0.50-0.75 and a 17.7% chance it gets raised to 0.75-1.00. The more futures contracts there are until the Fed meeting in question, the more data the Fed Rate Monitor Tool can provide.
Traders can use the Add to Calendar icon at the top-right of this section to add this event to their personal calendar.
Finally, there is a histogram of previous Fed interest rate decisions.
Enjoy the new tool! You can access it here and stay informed of Fed rate expectations.
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