Markets anticipate a low probability of Fed rate cuts in the short term

PanicSeller69 · 2026-02-13T17:03:15+00:00

Recent market data indicates a low probability of immediate interest rate cuts by the Federal Reserve, with an 8.9% chance in March. As we approach April, that probability rises to 22.5%, and by June, it reaches 45.9%, showing an increasing expectation for potential rate reductions later in the spring.

PanicSeller69

2026-02-13 17:03:15

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Market data shows a very low probability of immediate rate cuts based on expectations for the Federal Reserve’s future monetary decisions. The CME Federal Reserve Watch tool, a key indicator for market expectations regarding monetary policy, provides clarity on what traders anticipate in the coming months.

Outlook for March: Low likelihood of cuts

Data indicates only an 8.9% chance of a 25 basis point cut in March, while the probability that the Fed will keep interest rates unchanged is 91.1%. This scenario reflects the market’s cautious stance, expecting the Fed to focus on maintaining stability in the short term and virtually ruling out any easing action next month.

April: increasing probabilities

The probability gradually shifts as we move into April. Markets estimate a 22.5% chance of a cumulative 25 basis point reduction for that month, while 76.0% expect rates to remain steady. However, there is a less than 1.5% chance of a more aggressive 50 basis point cut, suggesting some analysts are considering more dovish scenarios.

Spring horizon: more favorable odds for cuts

The situation changes significantly by June, where the probability of a cumulative 25 basis point reduction rises to 45.9%. This substantial increase in likelihood reflects growing expectations that the Federal Reserve may begin its easing cycle during spring, responding to potential changes in inflation or economic outlook. The market thus anticipates that while March and April will likely remain restrictive, the chances of monetary easing increase as the second quarter progresses.

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