AppliedNumeric answer

The policy rate is $4.50\%$ . A meeting at the very start of next month will either leave it unchanged or cut by $25$ bp. Next month’s rate futures, priced as $100$ minus the average rate, trade at $95.60$ . What probability of a cut is priced?

Answer with a number. Fractions, powers and expressions like 23/6 or C(52,5) are read correctly in practice.

The worked solution is in Premium

The answer, the full working and the one idea to take away – for this and all 1,322 questions in the bank. Answer it in practice and your working is marked, with a known mistake named when you make one.

Start the 7-day free trial Practise it with Premium

Learn the method

Macro: the yield curve, the central bank and the calendar

Reported in interviews at

Jane Street, Citadel, DRW

The policy rate is 4.50%4.50\%4.50%. A meeting at the very start of next month will either leave it unchanged or cut by 252525 bp. Next month’s rate futures, priced as 100100100 minus the average rate, trade at 95.6095.6095.60. What probability of a cut is priced?

More markets and products questions

The policy rate is $4.50\%$ . A meeting at the very start of next month will either leave it unchanged or cut by $25$ bp. Next month’s rate futures, priced as $100$ minus the average rate, trade at $95.60$ . What probability of a cut is priced?