CME Releases Fed Rate Cut Probability Data

Summary

According to CME’s “FedWatch”: the probability of the Federal Reserve cutting interest rates by 25 basis points in January is 14.9%, and the probability of keeping rates unchanged is 85.1%. By March, the probability of a cumulative 25 basis point rate cut is 51.2%, the probability of keeping rates unchanged is 42.8%, and the probability of a cumulative 50 basis point rate cut is 5.9%.CoinLive

Impact Analysis

So, CME’s latest data shows a notable shift in rate cut probabilities, especially for March. The probability of a 25 basis point cut has jumped to 51.2%, up from 40.4% last monthQQ News. This suggests growing market anticipation of easing monetary policy, possibly due to economic data or geopolitical factors. The timing is interesting—right after the New Year, when markets are typically reassessing positions. This could lead to increased volatility, especially in rate-sensitive sectors like tech and financials. Investors might want to consider positioning for potential rate cuts, which could benefit growth stocks and pressure bond yields. However, the relatively low probability of a 50 basis point cut indicates caution, suggesting the Fed might be balancing inflation concerns with growth risks. Watch for any Fed commentary that could sway these probabilities further.