Fed Rate Cut Expectations Heat Up
According to the latest data from CME's Fed Watch, market expectations for the Federal Reserve's interest rate cuts in the coming months have evolved significantly.
March Sees Modest Rate Cut Probability
Data indicates that by March, the probability of a 25bps rate cut stands at 15.3%, while the probability of keeping rates unchanged remains high at 84.7%. This suggests limited room for monetary easing in the near term.
April Expectations Double
By April, market sentiment begins to shift, with the probability of a cumulative 25bps rate cut rising to 29.7%. The probability of maintaining rates drops to 67.2%, while there is also a 3.2% probability of a cumulative 50bps cut.
June Expectations Reach Peak
By June, the probability of a cumulative 25bps rate cut jumps to 48.3%. The likelihood of holding rates steady falls to 33.7%, with a 16.4% probability of a 50bps cut and even a 1.6% probability of a 75bps cut.
- March Rate Cut (25bps): 15.3%
- April Cumulative Cut (25bps): 29.7%
- June Cumulative Cut (25bps): 48.3%
Overall, market expectations for Fed easing are growing, especially by June, when the likelihood of rate cuts surpasses the probability of keeping rates steady.