CME Predicts Fed Rate Probability for Next Year

Summary

According to CME’s FedWatch, the probability of the Federal Reserve cutting interest rates by 25 basis points in January next year is 13.3%, and the probability of keeping rates unchanged is 86.7%. By March next year, the probability of a cumulative 25 basis point rate cut is 40.7%, the probability of keeping rates unchanged is 54.4%, and the probability of a cumulative 50 basis point rate cut is 5.0%.CoinLive+ 2

Impact Analysis

So, CME’s FedWatch is basically signaling that the market doesn’t expect much movement from the Fed in the near term. The high probability of rates staying unchanged in January (86.7%) suggests that despite strong GDP growth and low unemployment claims, the Fed might be cautious about rate cuts. This could be due to concerns about inflation or the need to maintain economic stability amid geopolitical tensions and AI-driven market dynamics. For investors, this means keeping an eye on sectors sensitive to interest rates, like financials and real estate. If the Fed does cut rates, it could boost these sectors, but the current sentiment leans towards stability. Watch for any shifts in Fed rhetoric or unexpected economic data that could alter these probabilities. Bottom line—stay nimble and ready to adjust positions if the Fed’s stance changes.