According to CME Fed Watch data from September 25, the likelihood of the U.S. Federal Reserve (Fed) cutting interest rates in November has significantly increased. Current market expectations indicate a 60.3% chance that the Fed will implement a 50 basis point rate cut at its November meeting. This percentage marks a notable rise from the previous month, signaling a clear shift in market participants’ expectations.
Strengthening Expectations of a 50 Basis Point Rate Cut
CME data shows that there is a 39.7% chance of a 25 basis point cut in November, a decline from the 46.2% likelihood seen a month ago. Meanwhile, the rising expectation for a 50 basis point cut indicates that markets are anticipating a more aggressive easing policy. In light of recent data, the majority of market participants believe the Fed will lower rates from the current target range of 475-500 basis points to 425-450 basis points. This probability has jumped from 53.0% the day before to 60.3% now.
Factors such as slowing signals in the U.S. economy and anticipated reductions in inflation are strengthening this expectation.
Markets Keep Focus on the Fed
In previous months, the market’s outlook on the Fed’s rate policy was more cautious. However, recent economic indicators and statements from Fed officials have increased the likelihood of a 50 basis point rate cut. Key factors driving this include a slowdown in the labor market and weakening consumer spending, both of which are raising the possibility of a rate cut.
Going forward, October’s economic data and further statements from Fed officials will be crucial in shaping rate cut expectations. Risk asset markets, such as the cryptocurrency market, will closely watch any hints and data leading up to the Fed’s November 7 rate decision.
Fed rate cut, 50 basis points, CME Fed Watch, interest rates, cryptocurrency market
