Fed Likely to Hold Rates Steady in January, Eyes Turn to March
Recent market projections indicate an 81.7% probability that the Federal Reserve will keep interest rates unchanged in January. This reflects a cautious approach by policymakers balancing inflation control against economic growth momentum.
A smaller portion of the market still anticipates easing, with an 18.3% chance of a 25-basis-point rate cut in January. However, the focus is increasingly shifting to the March meeting, where the likelihood of policy adjustment rises.
March Rate Cut Possible, But Not Guaranteed
By March, the odds of a cumulative 25-basis-point rate cut reach 40.7%, while the probability of holding rates steady remains high at 52.8%. A more aggressive 50-basis-point cut is seen as unlikely, with only a 6.5% chance, suggesting market skepticism about a rapid pivot to rate cuts.
This outlook highlights the Fed’s delicate balancing act: inflation remains above target, yet signs of economic cooling and global uncertainty are prompting cautious optimism for future easing.
- Probability of no change in January: 81.7%
- Chance of 25 bps cut in January: 18.3%
- Chance of 25 bps cut by March: 40.7%
- Chance of steady rates through March: 52.8%
- Chance of 50 bps cut by March: 6.5%
As critical economic data approaches release, speculation around the Fed’s next move will intensify. Upcoming CPI and nonfarm payrolls reports will be key in shaping market expectations.