Fed-Funds Futures Reflect Increased Likelihood of Quarter-Point Rate Cut After Inflation Insights

Wednesday, 11 September 2024, 06:23

After the inflation report, traders are seeing an 85% chance the Federal Reserve will cut rates by a quarter-point this month. The latest CPI data has shaped market expectations significantly, shifting from a 71% probability earlier. A half-point rate cut is now only seen at 15%.
LivaRava_Finance_Default_1.png
Fed-Funds Futures Reflect Increased Likelihood of Quarter-Point Rate Cut After Inflation Insights

Market Response to Inflation Data

Traders in the federal-fund-futures market on Wednesday observed an increased probability of the Federal Reserve implementing a quarter percentage point rate cut this month. As they scrutinized the latest reading on inflation in the U.S., Fed-funds futures indicated an 85% likelihood of a rate reduction to a target range of 5% to 5.25% in September, according to the CME FedWatch Tool.

Inflation Impact and Market Movement

Following the release of consumer-price-index data on U.S. inflation for August, expectations transformed dramatically. Earlier on Wednesday, traders had priced an only 71% chance of such a cut before the CPI data was made public at 8:30 a.m. Eastern time. This shift in perception highlights the immediate influence of economic indicators on monetary policy.

Future Rate Cut Speculations

  • Half-point rate cut likelihood reduced to just 15% in September.
  • Shift in market sentiment based on inflationary pressures.
  • Traders adjusting strategies to reflect updated economic outlook.

This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.


Related posts


Newsletter

Get the most reliable and up-to-date financial news with our curated selections. Subscribe to our newsletter for convenient access and enhance your analytical work effortlessly.

Subscribe