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CME Data Shows 91.2% Chance of Fed Rate Cut in September

Following Jerome Powell’s dovish remarks, CME FedWatch shows increased market expectations for a September 25 basis point rate cut, reflecting shifting economic risk assessments.

Summary

On August 23, Federal Reserve Chair Jerome Powell signaled that changing economic risks strengthen the case for a rate cut, aligning with the dovish side of the FOMC. His comments boosted market expectations for a 25 basis point cut at the September meeting, with CME FedWatch reporting the probability rose to 85.2% from about 75% prior to his speech. The chance of rates remaining unchanged now stands at 14.8%.

Terms & Concepts
  • FOMC (Federal Open Market Committee): The branch of the U.S. Federal Reserve responsible for setting monetary policy, including interest rates.
  • CME FedWatch Tool: A market-based probability tracker that uses futures pricing to estimate the likelihood of changes in the Federal Reserve's interest rate policy.
  • Rate Cut: A decision by a central bank to lower its benchmark interest rate, typically aimed at stimulating economic activity.