Markets Predict No Rate Cuts Before September

While President Donald Trump is pushing hard for the Fed to cut interest rates, demanding as much as a full percentage point cut after the latest CPI report last week, markets are all but certain that the Fed will continue to “wait and see” for the foreseeable future.

According to the CME FedWatch tool, which predicts the outcome of future FOMC meetings based on 30-day Fed Funds futures prices, there’s a 99.8-percent chance of the Fed keeping its policy rate at the current target range of 4.25 to 4.50 percent this week, while the chances of a 25-point cut at the July meeting are only marginally higher at 18.6 percent.

As of today, markets are pricing in one rate cut in September with a 54-percent probability and another one in December. According to interest rate traders, there’s a 40-percent chance of the year ending with a target range of 3.5 to 4.0 percent, a 25-percent chance of rates going even lower than that and a 35-percent chance of just one or not cuts at all this year.