How to read 2 basis points on Wednesday and 21 in December

A Monday calculation, using one bank’s snapshot and no one else’s. MUFG’s FX daily of 26 October 2026 said about 2 basis points of hikes were priced for Wednesday’s Federal Reserve meeting, and about 21 for December. Canada and New Zealand, meeting the same Wednesday, were described as close to 90% priced for a 25-basis-point hike. The Fed, the ECB and the Bank of Japan were the holds in that note.

The mistake is to average those numbers, or to call 21 basis points “the probability”. A basis point in an overnight index swap is a rate. A probability is a weight on a scenario. You only get from one to the other by writing the scenarios down.

The two-outcome shortcut#

Assume, and this is an assumption, that the December meeting does either nothing or 25 basis points. Then the priced move in basis points, divided by 25, is the weight on the hike.

Under that shortcut, Wednesday is an 8% hike and December is an 84% hike, and the Canadian and New Zealand meetings are slightly fuller than December. The shortcut is useful because it stops someone from saying the Fed “might hike this week” in the same sentence as Canada. It is dangerous if the 25-basis-point grid is wrong. A 50-basis-point outcome, or a cut, does not divide by 25.

MUFG also said the September projections’ median was one further hike this year. Twenty-one basis points is in the neighbourhood of a quarter-point that is mostly, not fully, in the price. It is not a second hike, and it is not a promise that the dot is still the median. Dots are a September object. The December contract is an October object. Keeping them in separate columns is the calculation.

What not to fold in#

The same MUFG note said the Nasdaq was 6% under its record closing high of October, that housing starts fell 5.2%, that pending home sales fell 7.3%, and that mortgage applications had fallen for seven straight weeks, the longest streak since November 2022. CNBC, separately, had the 10-year yield at 4.974% on Monday morning. None of those figures is an input to the division above. They are reasons a later model might change the 21. They are not the 21.

Chris Weston of Pepperstone, quoted by CNBC, said the decisions looked largely discounted and that guidance about later meetings was the part that could reprice the curve. That sentence is a description of where the sensitivity sits. It does not replace the arithmetic.

If Wednesday’s statement leaves the December contract at 21 basis points, the two-outcome weight is unchanged and the week’s information was elsewhere. If the contract moves by 5 basis points, the weight moves by 0.20 under the same assumption. That is the only before-and-after this desk will compute when the statement exists. It will not compute it on Monday.

The same discipline applies to the other Wednesday meetings. “Close to 90%” of a 25-basis-point hike, which is how MUFG described Canada and New Zealand, is already a probability. Multiplying by 25 turns it back into about 22.5 basis points, so it can be compared with the Fed’s 21. Comparing 90% with 21 basis points without that conversion is how a table lies. CNBC did not publish those basis points at all. It said hikes were being priced for Canada and New Zealand and holds were expected for the Fed, the ECB and the Bank of Japan. A model that needs a number has to cite MUFG. A model that only needs the direction can cite CNBC. Mixing them produces a precision the looser source did not claim.

This is a note on units. It is not a trading signal and not a prediction of the Federal Reserve.