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CME FedWatch Indicates Growing Odds of U.S. Rate Cut by June

Latest data shows only modest likelihood of a March rate cut, with markets anticipating greater easing prospects later in 2025.

Summary

According to CME FedWatch data on February 4, 2025, markets assign a 9% probability to a 25 basis point rate cut by the U.S. Federal Reserve in March, while the likelihood of no change stands at 91%. This reflects tempered expectations for near-term easing, with higher probabilities of rate adjustments projected for later months.

Terms & Concepts
  • CME FedWatch: A market-based tool from the Chicago Mercantile Exchange that calculates probabilities of future Federal Reserve interest rate changes based on Fed fund futures.
  • Basis Point (bps): A unit equal to one hundredth of a percentage point, commonly used to describe changes in interest rates or yields.
  • Federal Reserve Rate Cut: A reduction in the target range for the U.S. federal funds rate, aimed at stimulating economic activity by lowering borrowing costs.