Right now, the market is leaning towards the U.S. Federal Reserve lowering the benchmark interest rate at the Sept. 18, 2024, Federal Open Market Committee (FOMC) meeting. The CME Fedwatch tool currently indicates a 75% likelihood of a 25-basis-point (bps) rate cut. Over on Polymarket, bettors are even more confident, showing an 82% chance of the same outcome.
Fedwatch Tool and Polymarket Indicate Strong Odds for September Rate Cut
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As Election Nears, Market Anticipates Fed Rate Cut at September Meeting
This September, all attention will be on the U.S. central bank as the FOMC meeting rolls around, where the Fed will make its call on the federal funds rate. This time, the market is anticipating a rate cut, a change from the earlier months when expectations were for the Fed to hold steady.
As predicted by CME futures data, the central bank stayed the course during the last FOMC meetings without any adjustments. This time, the stakes are higher with the FOMC meeting just three weeks ahead of the U.S. presidential election.
Adding to the tension, economists and analysts have been sounding alarms about a potential recession, and the Aug. 5 stock market dip only heightened investor anxiety. According to the CME Fedwatch tool, there’s a 75% chance of a 25-basis-point (bps) rate cut, while a 50bps cut holds 25% odds.
Although Fedwatch is typically on the money, it has missed the mark on a few rare occasions. Meanwhile, Polymarket bettors are also placing their wagers on the Fed’s next move in September.
One bet suggests an 82% probability of a 25bps rate cut. The market, dubbed “Fed Interest Rates: September,” is currently valued at $4.9 million, with a 14% chance of a 50bps cut and a 6% chance for the riskier bet of “no change” at the upcoming FOMC meeting.
What do you think about the Fed rate predictions from CME and Polymarket? Let us know what you think about this subject in the comments section below.
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