With fresh inflation figures due out Wednesday, traders are settling on a new outlook for Federal Reserve interest rates this year.
Markets are pricing in a 32% chance that the Fed’s benchmark slips to 3.5%-3.75% by the Dec. 10 decision, or three quarter-point moves lower from the current level. A month ago, the odds that rates would fall that far was just 6%, according to the CME FedWatch tool.
The odds have shifted even more than those figures reveal. There’s a 23% chance of four quarter-point reductions, and an 8% chance of five. A month ago, there was still a 30% chance that the Fed wouldn’t cut at all in 2025.
