Kayce Basques

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January 2022 Federal Funds Rate

December 31, 2021

Summary: A bet on where the Federal Funds Rate will be on 2022 January 26.

Updates

2021 December 31

The GJ Open crowd forecast is 95% "same" and 5% "higher", which was the same as my last forecast. I am attempting to game my GJ Open Brier Score by pushing my forecast slightly beyond the crowd consensus.

2021 December 23

The CME tool now has the odds at 5%. The current crowd forecast on GJ Open is 92% same rate. That's way too low.

2021 November 3

The CME tool now has the odds at 2.5%.

The last time that the Fed raised rates was December 2015. In the meeting before that, October 2015, the Fed mentioned that they were thinking about raising rates in the next meeting. They did not make any mention like that this time.

2021 October 25

Jim Bianco put out a thread with some links to tools that supposedly show how the market is pricing in hikes. The CME tool puts the odds at 7%. I'm updating my forecast accordingly to account for the small possibility.

GJ Open forecast

2021 September 30

The Fed moves slowly and broadcasts its moves well in advance. Their "transitory inflation" narrative is not facing a unified attack. We would need to see a severe shock or months of sustained inflation across many, many politically sensitive areas in order for the Fed to move higher. They also will not move lower because negative rates for the world's reserve currency would be a very controversial move that could cause a lot of disorder in markets. Barring a severe shock (e.g. February 2020) if the Fed was going to move higher or lower, they would have made it very clear by now.

GJ Open forecast