Jan 5, 2019
In this episode Derek Moore discusses the various ways the Federal Reserve through its FOMC committee utilizes interest rates, buying or selling bonds, and the banks reserve ratios to increase or decrease the money supply. Plus, when pundits on CNBC, Blooomberg, or Fox Business talk about probabilities of future rate decisions, how do they come up with those and where to find them.
Key Takeaways:
- • What are Fed Funds Futures?
- • How are Fed Funds Futures utilized to determine probabilities of future months interest rate decisions?
- • What is the difference between the Fed Funds Rate, Discount Rate, and IOER or Interest on Excess Reserves?
- • What is the Federal Reserve’s Dot Plot and where to find this so-called Dot Plot?
- • Where to find current probabilities of the Fed raising or lowering interest rates by month
- • Why are interest rates important to the economy and stock prices?
- • Who makes up the FOMC or Federal Open Market Committee
- • How often are FOMC meetings held?
- • What is Interest on Excess Reserves (IOER)
Mentioned in this Episode:
CME Fed Funds Watcher Probability Tool https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOMC Dot Plot Graph https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
Tracking Changes to Federal Reserve Fed Funds Probabilities https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
Effective Fed Funds Rate % Chart From Federal Reserve Bank of St. Louis or FRED https://fred.stlouisfed.org/series/DFF#0
FOMC Meeting Calendar https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm