CME Forecasts Future Fed Rate Cuts Probability

Summary

According to CME’s FedWatch, the probability of a 25 basis point rate cut by the Fed in January 2026 is 24.4%, while the probability of maintaining the current rate is 75.69%. By March 2026, the probability of a cumulative 25 basis point cut is 41.4%, maintaining the rate is 50.5%, and a cumulative 50 basis point cut is 8.1%.Zhitong+ 2

Impact Analysis

So they’re basically signaling that the market is not fully convinced about a rate cut in the near term. The high probability of maintaining rates suggests that economic indicators might not be strong enough to warrant a cut, or there’s a lack of consensus on the economic outlook. This could mean that the Fed is waiting for more data before making a move, especially with mixed signals from employment and inflation data. For investors, this means staying cautious on interest rate-sensitive sectors like real estate and utilities, as the expected rate environment remains uncertain. However, if the Fed does cut rates, it could provide a short-term boost to equities, particularly those with high leverage or growth stocks that benefit from lower borrowing costs. Keep an eye on upcoming economic data releases for any shifts in these probabilities.