Market anticipates possible September rate cut by the Federal Reserve
As the September 18, 2024, Federal Open Market Committee (FOMC) meeting approaches, market sentiment is increasingly leaning towards the U.S. Federal Reserve lowering the benchmark interest rate.
The CME Fedwatch tool currently indicates a 75% probability of a 25-basis-point rate cut at the upcoming meeting.
This expectation reflects growing concerns about the U.S. economy, especially with the presidential election just three weeks away.
Polymarket bettors are even more confident in this outcome, showing an 82% chance that the Fed will opt for a 25bps rate cut.
In recent months, the Fed has held steady on rates during its meetings, but the economic landscape has shifted, with fears of a potential recession gaining traction.
The August 5 stock market dip has only heightened investor anxiety, further fueling expectations of a rate cut.
The CME Fedwatch tool also shows a 25% chance of a more significant 50bps cut, though this scenario is considered less likely.
On Polymarket, there is a 14% probability of a 50bps cut and a slim 6% chance that the Fed will make no changes at all in September.
This FOMC meeting is particularly crucial as it comes at a time of increased economic uncertainty and political significance, with the U.S. election looming.
The potential for a rate cut is seen as a move to provide additional economic support amid these challenges.
Both the CME Fedwatch tool and Polymarket are closely monitored by investors for their predictions, but the ultimate decision will rest with the Fed as it assesses the economic data leading up to the meeting.
The outcome will have important implications for the economy, especially in the context of the approaching election.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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