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The Atlanta Fed's macroblog provides commentary and analysis on economic topics including monetary policy, macroeconomic developments, inflation, labor economics, and financial issues.

Authors for macroblog are Dave Altig, John Robertson, and other Atlanta Fed economists and researchers.


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June 13, 2005


Federal Funds Probabilities: Measured Pace Fades

Now things are starting to get a little more interesting.  To nobody's surprise, the probability of a 25 basis point increase at the next Federal Open Market Committee meeting on June 29 and 30 continued its inexorable march toward 100 percent.  (As always, these probabilities are estimated from prices on options for federal funds futures.)

There was considerably more action in the October contracts (spanning meetings in June, August, and September).  The probability attached to the "measured pace" scenario -- a cumulative 75 basis point increase over the period -- fell dramatically, from over 55% at the beginning of last week to just under 18% by the close of trading on Friday.  The probability on every other option considered -- no change after the presumed 25 basis points at the June meeting, an additional 25 basis point and then a pause, and even a more-aggressive-than-measured increase of 100 basis points through to October -- gained.  Nonetheless, the weight decidedly shifted to some sort of break in the pace of funds rate increases.

Here are the pictures:

July_12

October_6

Here are the pictures in Power Point format, if you'd like:
Download Imp_pdf_slides_for_blog_061005.ppt

And the data in Excel spreadsheets:
Download july_pdfs_061305.xls
Download october_pdfs_061305.xls

And if you are new here, this link will take you to a website that explains what this is all about.

(Thanks Pat -- welcome back Erkin.)

June 13, 2005 in Fed Funds Futures | Permalink

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Listed below are links to blogs that reference Federal Funds Probabilities: Measured Pace Fades :

» Worries about the yield curve from Econbrowser

The yield curve has inverted eight times in the last half century, and in six of those episodes, the U.S. ended up in recession. Some analysts are concerned that we may see a ninth inversion before the end of this year.

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Tracked on Jun 17, 2005 12:51:32 AM

Comments

greetings from 4 degrees North where I'll be for the next two years (Europe's development aid...). When standing south of the digital frontier, this blog becomes irreplaceable to more or less follow what's going on. I'll be checking it out every time I can find a really fast connection such as the present 3.5 kbits. Cheers, D Altig.

Posted by: godement | June 13, 2005 at 02:02 PM

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