Federal Reserve Chairman Jerome Powell speaks during a news conference at the William McChesney Martin Jr. Federal Reserve Building in Washington, DC, on November 7, 2024, following the November 6-7, 2024 Federal Open Market Committee meeting. .
Andrew Caballero Reynolds | AFP | Getty Images
Expectations for the Fed to cut interest rates in December remain strong Cut interest rates by a quarter of a percentage point November, but market pricing hints at the possibility of “skipping” January.
On Thursday afternoon, the Federal Reserve lowered the federal funds rate, which determines how much banks charge for overnight loans, to a target range of 4.5% to 4.75%.
According to the Federal Reserve, before the Fed issued its decision at 2 p.m. ET, market pricing showed a 67% chance of another 25 basis point rate cut in December and a 33% chance of suspending rate cuts that month. CME Group Fed Watch Tool.
After the meeting, the probability of a 25 basis point rate cut in December rose to over 70%, while the probability of a pause in interest rate cuts fell to nearly 29%. Future interest rate odds in CME’s FedWatch tool are derived from trading in the 30-day Fed Funds futures contract.
At the same time, the probability that the Federal Reserve will not cut interest rates in January is about 71%. That’s slightly higher than the 67% level before the Fed’s November decision was released Thursday afternoon.
—CNBC’s Jeff Cox contributed to this report.
