The Fed is under intense political and economic pressure ahead of its critical interest rate decision, which will be announced on October 29.
As President Donald Trump continues to call for interest rate cuts, data from prediction market Polymarket suggests investors are almost certainly expecting a cut.
Markets Predict 98% Chance of Fed Rate Cut
According to Polymarket data, the probability of the Fed cutting interest rates by 25 basis points is priced in at 98%, excluding fractions. Roughly speaking, the probability of a 50 basis point or greater cut is 1%, the probability of no change in interest rates is 1%, and the probability of a rate hike is less than 1%.
The primary driver of market expectations for an interest rate cut has been the recent release of weak employment data. The lower-than-expected private sector employment figures, in particular, point to a slowdown in the labor market.
The Fed, which resumed interest rate cuts in September, is expected to take similar action at this meeting. Economists at Bank of America Securities predicted that, “In addition to cutting interest rates by 25 basis points at its October meeting, the Fed may announce an end to its balance sheet contraction.”
*This is not investment advice.