The Federal Reserve's policy will enter a longer observation period, and consecutive rate cuts may be difficult to see in the first quarter of next year.

According to the latest data from CME's "FedWatch" tool, the market generally believes that the probability of the Federal Reserve maintaining interest rates at the January 2026 meeting has reached 80.1%.

This means that the mainstream market expectation has shifted from "when to cut interest rates" to "whether to pause," and the anticipation for an immediate easing of monetary policy has significantly cooled.

At the same time, the market's expectations for the timing of the Federal Reserve's interest rate cuts have shifted later. Data shows that the probability of the Federal Reserve cumulatively cutting rates by 25 basis points in March 2026 is 44.7%, while the probability of maintaining the current interest rate is 47.1%, with both nearly at parity;

The probability of a 50 basis point rate cut is only 8.2%. This indicates that the Federal Reserve is more likely to hold steady or make a small reduction in the first quarter of next year, with a rapid rate cut being less likely.

This change in probability is also the result of the recent economic data and the statements from Federal Reserve officials. From an economic perspective, while inflation data has eased somewhat, it remains sticky, and the labor market continues to show strong resilience.

Against this backdrop, several officials from the Federal Reserve have recently released clear signals of caution, stating that after consecutive interest rate cuts, the policy needs to allow for a time window to observe its effects.

At the same time, the market is closely watching the upcoming announcement in early January regarding the appointment of the new chairman of the Federal Reserve by the Trump administration, as the policy preferences of the future leadership will be a key variable affecting the path of interest rates.

In summary, the market is pricing in a long-term policy observation period for the Federal Reserve. The trend of maintaining high interest rates in the short term remains unchanged, while the pace and extent of interest rate cuts in 2026 will depend more on the performance of subsequent economic data and the clarification of the transition in the Federal Reserve's leadership.

#美联储 # interest rate