GMSTechStreet.com Fed Index Page

Fed Page

Dan Ascani's "FedCalc" Interest Rate Forecasts

Please Note: We no longer accept subscriptions to GMSTechStreet.com services such as TechTrader Online and GoldTech online. That's because we have big plans in the making, so please stay tuned for announcements. Meanwhile, we will no longer charge your credit card for autorenewals to services. If you have any questions as to recent charges, please e-mail us at: subscriptions@gmstechstreet.com.

What is "Fedcalc? " It’s my interest rate forecast based on a model that calculates the market-dictated probability that the Federal Reserve Board’s policymaking arm, The Federal Open Market Committee (FOMC), will change interest rates. The model is extremely useful because it projects the probability BEFORE each FOMC meeting. By knowing which direction interest rates are likely to move ahead of time, investors can make their everyday trading decisions, without having to wait for the stock and bond market reaction to each FOMC announcement on interest rates.

The procedure for determining my Fed Forecast is based on two factors: An “Open Fed” policy in which the Federal Reserve Board openly communicates to the markets and hints at its intentions; and the advent of Federal Funds futures contracts. These contracts make it possible for investors to know what direction the credit markets expect the Fed to move on a particular interest rate decision, while also making it possible for the Fed to see how the marketplace interprets its actions and communications.

In fact, the Fed Funds’ futures market allows us to calculate the precise probability of when the Fed will act and in what direction rates will head. In my Fed Forecast Report, posted to this website one to two days before each regular FOMC meeting, I show you the precise calculations used to formulate my interest rate forecast. I’ve published my Fed forecasts since January 2000. The model has never been wrong in forecasting the direction of interest rates at FOMC meetings.

The Federal Funds Rate is the interest rate at which banks borrow from each other overnight to meet bank reserve requirements. This key interest rate influences other rates in the private sector, such as the prime rate, home equity loan rates, variable-rate mortgages, and other interest rates charged to consumers.

http://www.gmstechstreet.com