Boockvar’s math goes like this: The Fed’s current short-term rate target is 0.5 to 0.75 percent, which would make the midpoint 0.625 percent. The April funds contract indicates a 0.75 percent funds rate. Given that the contract is exactly half way to another quarter-point move, that would put the chances at 50 percent.
To be sure, Fed watchers use a variety of equations to calculate the funds rate, and the CME’s tracking tool, to cite another prediction, gave March only a 31 percent chance Monday afternoon.
Whichever calculation investors wish to buy, it’s clear that March is at least on the table for a move, though far from a certainty.
A faster-moving Fed, coupled with curtailed easing from the European Central Bank and Bank of Japan, could have negative implications for global growth, Boockvar said.
“I’ve been describing this year as an unfolding tug of war between the tail wind of hoped-for tax and regulatory relief against the headwind of a tightening Fed and ECB and BOJ,” he said. “Global central banks, in my opinion, have reached peak easing, and this year we are going to see a pullback from that. I think that really matters.”
Fed Chair Janet Yellen and Vice Chair Stanley Fischer both are due to speak Friday in the last bits of Fed speak before the meeting. Boockvar said the speeches will be critical to anticipation of whether March in fact features a hike.