From CNBC: 2024-07-16 11:58:44

Traders are certain the Federal Reserve will cut interest rates by September, with odds at 93.3% for a quarter-point drop and 6.7% for a half-point cut. The catalyst was a June CPI report showing a 0.1% decrease and the lowest inflation rate in three years at 3%.

The CME FedWatch Tool calculates odds based on trading in fed funds futures contracts. Traders are placing bets on the fed funds rate in 30-day increments. Fed Chairman Jerome Powell’s remarks have also reinforced the belief in a rate cut by September, stating they won’t wait for inflation to reach 2%.

Powell emphasized the need for “greater confidence” in inflation returning to 2%, and noted recent positive inflation data reinforces that confidence. The Fed meets on rates next on July 31 and September 18. There is no meeting scheduled for August.

Read more: Traders see the odds of a Fed rate cut by September at 100%