Fed Probability Account: Market Awaits Signals of Rate Cut

The dynamics of U.S. monetary policy continue to capture the attention of global investors. Based on the “Federal Reserve Observation” tool provided by CME, the probability account indicates a prolonged cautious outlook for the upcoming Federal Reserve interest rate decisions.

March Shows Caution with Only a 17.7% Chance of a Cut

According to information compiled by Jinshi, the likelihood of the Federal Reserve implementing a 25 basis point cut in March remains extremely low, at just 17.7%. In contrast, the probability of maintaining interest rates at the current level is significantly higher, at 82.3%. This scenario reflects market expectations that the central bank will keep a restrictive stance in the short term.

April Outlook: Probabilities Increase with 32.4% Cumulative

Shifting focus to April, the probability account shows a more significant change. The cumulative chance of a 25 basis point cut rises to 32.4%, while the chance of holding rates steady drops to 63.5%. Although still minority, this probability account demonstrates a growing expectation of monetary easing. Additionally, a small cumulative probability of 4% appears for a more aggressive 50 basis point cut.

June Marks Turning Point with a Cumulative Probability of 50.4%

Looking ahead to June, the probability account shows a clear inflection in expected behavior. The cumulative probability of a 25 basis point cut exceeds 50%, reaching 50.4%. This level represents a turning point where the market begins to price in a baseline scenario of monetary easing by the Federal Reserve.

The progression of the probability account over these months illustrates how market participants are adjusting their expectations regarding the Federal Reserve’s policy trajectory, signaling a possible transition from a restrictive period to a cycle of easing monetary conditions.