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CME Data Shows 92.1% Probability of Fed Rate Cut in September

CME FedWatch indicates strong expectations for a September 25 basis point cut, with markets heavily pricing in further reductions by October.

Summary

CME's FedWatch tool shows an 84.6% probability of a 25 basis point rate cut by the U.S. Federal Reserve in September, with a 15.4% chance of no change. For October, probabilities are 6% for no change, 42.4% for a cumulative 25 basis point cut, and 51.5% for a cumulative 50 basis point cut. These figures suggest markets anticipate multiple cuts over the coming months.

Terms & Concepts
  • Basis Point: A unit of measurement for interest rates and other financial percentages, equal to one hundredth of a percent (0.01%).
  • CME FedWatch Tool: A tool from the Chicago Mercantile Exchange that uses futures pricing to estimate market expectations for Federal Reserve interest rate changes.
  • Interest Rate Cut: A reduction in the central bank's benchmark interest rate, aimed at stimulating economic activity by lowering borrowing costs.