The market is holding out hope for a bigger rate cut as the Federal Open Market Committee (FOMC) prepares to meet on Wednesday. Predictions from Polymarket and CME’s Fedwatch tool suggest there’s a growing expectation that a 50 basis points reduction could be in play.
Fedwatch Tool Shows 50-50 Chance for 25bps or 50bps Cut Before FOMC
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FOMC Meeting Could See Bigger Rate Cut as Expectations Shift
Just three days ago, Bitcoin.com News covered the odds of a 25 or 50 basis points (bps) cut ahead of the FOMC meeting on Sept. 18. Back then, the market strongly leaned toward a 25bps reduction, with CME’s Fedwatch tool giving it an 87% chance. Over on the blockchain-powered predictions platform Polymarket, bettors were even more confident, placing a 92% likelihood on a 25bps cut.
Fast forward to today, and the mood has shifted significantly, with the market now setting its sights on a much larger 50bps cut this Wednesday. The Fedwatch tool now places the odds of a 25 or 50bps cut at an even 50-50. It’s also raised the likelihood for a 50 or 75bps reduction at the Nov. 7 FOMC meeting.
Some suggest that the U.S. Federal Reserve is facing pressure to catch up with these important upcoming decisions. “Our view is that the Fed is behind the curve – that it should have been easing from June even, or potentially May – and that now it needs to catch up and may have to front-load some of the rate cuts,” Parthenon economist Gregory Daco told Reuters on Sept. 13.
Polymarket bettors have also shifted their outlook. Just three days ago, the platform’s users gave a 25bps cut a solid 92% probability, while a 50bps reduction was pegged at just 7%. Fast forward to Sept. 15, and the odds have changed dramatically, with a 50bps cut now sitting at 34%, and a 25bps reduction holding a 65% chance. Whatever the outcome, the upcoming FOMC meeting is bound to be a memorable one for the history books.
What do you think the Fed will do at the next FOMC meeting? Share your thoughts and opinions about this subject in the comments section below.
