JUNE 11, 2018 – A SLOW DATA WEEK ENDS; WE AWAIT NEWS FROM THE FOMC MEETING
Many economists, both business and academic, are expecting Fed officials to lift rates at their policy meeting Wednesday. The latest Wall Street Journal survey predicts a 100 percent probability of a rise being announced this week, a 83.9 percent probability of a third hike in September and a 16 percent likelihood of a fourth increase in December.
In March 2018, Fed officials lifted the benchmark federal funds rate by 0.25 percentage points, and at hinted two more quarter-point moves this year. The range of rates now stands at 1.50 to 1.75 percent.
Interest rates are going up, albeit at a moderate pace. The opportunity remains for investors to hedge against future rate increases and save on payments going forward. We continue to recommend medium-term interest rate swaps over caps as the best way to hedge your loan portfolio.