According to CME’s FedWatch Tool data, the probability of the Fed cutting interest rates in September has reached 86.4%.
In contrast, the probability of interest rates remaining at current levels was calculated as 13.6%.
The federal funds rate target range currently stands at 4.25% to 4.50%. Data suggests that a 25 basis point cut would likely bring the rate back to 4.00% to 4.25%.
A 50 basis point cut is not currently considered a possibility.
Comparisons from previous periods also indicate a steadily increasing expectation of a rate cut. A week ago, the probability of a rate cut was 84.7%, while a month ago, it was 46.7%. Conversely, the probability of a rate cut remaining at the current level was 52.4%, but today it has fallen to 13.6%.
The next Fed meeting is approximately 17 days away, and markets have largely priced in a rate cut.
US President Donald Trump is putting significant pressure on Fed Chair Jerome Powell to cut interest rates. Trump even considered Powell’s dismissal. However, Powell doesn’t make interest rate cut decisions alone; they are made through a vote held within the Fed. Recently, Fed member Lisa Cook was dismissed by Trump over allegations of mortgage fraud, but Cook subsequently filed a lawsuit over the decision.
*This is not investment advice.