CME FedWatch Tool Shows Fed Rate Cut Probability

Summary

According to BlockBeats, the CME FedWatch Tool indicates a 17.2% probability of a 25 basis point rate cut by the Federal Reserve in January, while the likelihood of maintaining the current rate stands at 82.8%. By March, the probability of a cumulative 25 basis point rate cut increases to 43.6%, with a 49.4% chance of rates remaining unchanged. The probability of a cumulative 50 basis point rate cut is 6.9%.CoinLive

Impact Analysis

So, the FedWatch tool is showing a 17.2% chance of a rate cut in January, which is pretty low but still notable given the current economic backdrop. The timing here is interesting—right after the holiday season when markets are typically more volatile. This could be a signal that the Fed is preparing to act if economic conditions worsen. The probability jumps to 43.6% by March, suggesting that the market is increasingly pricing in a rate cut as a response to potential economic slowdown or geopolitical tensions. This could lead to shifts in asset prices, particularly in interest-sensitive sectors like real estate and financials. Investors might want to consider positioning for potential rate cuts by looking at bonds or dividend-paying stocks, which could benefit from lower rates. Also, keep an eye on gold and cryptocurrencies, as they might react to changes in rate expectations and dollar strength.CoinLive+ 3