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
After the Federal Reserve lowered interest rates by a quarter of a percentage point in November, expectations for a rate cut in December remain strong, but market pricing suggests a possible “jump” in 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 rate cuts fell to nearly 29%. Future interest rate odds in CME’s FedWatch tool are derived from trading in the 30-day federal funds futures contract.
At the same time, the probability that the Fed 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.
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