Abstract
This paper demonstrates formulas used by market participants to predict the probability of an increase in the Fed Funds rate and suggests how these formulas can be used in the classroom. Utilizing Fed funds futures contracts, instructors can demonstrate how the market anticipates actions by the Federal Open Market Committee and can give assignments to students to have them calculate the probability of a rate change. This activity can enhance students’ understanding of financial markets, interest rates, and futures contracts and supply students with a useful tool to use in the business world.
Recommended Citation
(2026)
"Using Fed Funds Futures to Predict a Federal Reserve Rate Hike,"
Journal of Economics and Finance Education: Vol. 6:
Iss.
2, Article 6.
Available at:
https://scholarship.rollins.edu/jefe/vol6/iss2/6
