How to calculate probability of a rate hike?

Yea and the problem is that when banks start reaching for earnings, they can do stupid stuff that impacts everyone. Let’s hope that doesn’t happen. I think what you’ll see (and what has been happening somewhat) is people rotate into large banks that rely less on spread income and more on fees and small, highly profitable, and high growth banks. When I checked earlier today, one bank that fits that latter category is almost at 4x Tangible Book value, which is basically unheard of currently. But people want the growth, earnings, and other sectors are freaking people out (Amazon is going to kill retail, their is a bubble in pharma, etc).

  • OIS first prices >50% chance of rate increase to 0.3750% for Jan. from Feb. yday; pulls forward first fully priced hike two months to April from June

to you Americans out there, how high will the key interest rate need to get to move the needle on the Prime rate?

Canada’s Prime is 2.70% and our key rate is 0.5%.

U.S. Prime is 3.25% and key rate is 0%.

as a result of the disconnect above, and the fact that Canadian banks didn’t lower Prime in tandem with recent rate cuts, i doubt the first 100bps in U.S. key interest rate hikes is going to have much affect on Prime. Isn’t this why banks would benefit from a rate increase? prime (i.e. mortgage/loan cost) stays the same, but the return banks receive on Fed deposits rises?