According to the CME Fed Watch data dated September 25, the likelihood of the U.S. Federal Reserve (Fed) implementing a rate cut in November has significantly increased. Current market expectations suggest a 60.3% probability of a substantial 50 basis point cut during the Fed’s November meeting. This percentage indicates a notable rise compared to the previous month, reflecting a clear shift in market participants’ outlook.
Strengthening Expectations for a 50 Basis Point Rate Cut
The CME data also predicts a 39.7% chance of a 25 basis point cut at the November Fed meeting, which represents a decrease from last month’s 46.2% probability. Meanwhile, the rising expectations for a 50 basis point cut reveal that markets are anticipating a more aggressive easing policy.
In light of recent data, the majority of market participants now believe the Fed will lower rates from the current target range of 475-500 basis points to 425-450 basis points in November. This probability has increased from 53.0% the previous day to 60.3% now.
Factors such as signs of a slowdown in the U.S. economy and expected declines in inflation are strengthening these expectations.
Markets Focus on the Fed
Compared to assessments from the previous month, the market’s expectations regarding Fed rate policy were more cautious. However, recent economic indicators and statements from Fed officials have raised the likelihood of a 50 basis point rate cut. In particular, the observed slowdown in the labor market and weakened consumer spending are emerging as key elements increasing the probability of rate cuts.
In the coming period, especially the economic data from October and statements from Fed officials will be significant as they could lead to further shifts in rate cut expectations. Market participants in risky asset markets, such as cryptocurrency, will closely monitor any clues and data leading up to the Fed’s interest rate decision announcement on November 7.
