Market Certain of Fed Rate Cut. But Inflation Data Raise More Questions.
Inflation data appear to have cemented the market’s view of a quarter-point rate cut next week, but beyond that they have provided little clarity.
Traders now see a 99% chance of a cut on Dec.18, up from 71% a week ago, according to CME’s FedWatch tool. The latest consumer price index data coupled with last week’s jobs report have helped solidify the consensus.
But those two key reports haven’t lifted the uncertainty around the Federal Reserve’s rate path in the first half of 2025. After an expected December cut, there’s a 38% chance of just one more by the end of June or 35% likelihood of two–that’s remained the same in recent days give or take a few percentage points.
