Fed Rate Cut Outlook Heavily Favors September Move, With 90.7% Cut Probability

ChainSauceMaster · 2025-12-26T22:23:21+00:00

CME's FedWatch tool indicates a strong market expectation for a 25 basis point rate cut by the Fed in September, with future predictions showing uncertainty about further cuts in October, impacting risk assets and cryptocurrencies.

ChainSauceMaster

2025-12-26 22:23:21

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CME’s FedWatch tool reveals a decisive market consensus on monetary policy for the near term. The Federal Reserve faces a 90.7% likelihood of delivering a 25 basis point rate reduction in September, while holding rates steady carries just a 9.3% probability.

The picture becomes more nuanced when looking further ahead to October. The odds of keeping rates on hold drop to 4.5%, but the market sees the path forward splitting into two scenarios: a 48.9% probability of another single 25 basis point cut, and a 46.5% chance of a larger 50 basis point reduction. This split forecast suggests traders are pricing in uncertainty about the pace of monetary easing.

The data underscores growing expectations that the Fed will finally pivot from its hiking cycle. For crypto markets and broader financial assets, the implications are significant—lower interest rates typically support risk assets and can fuel investor appetite for alternative investments like digital currencies.

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