According to Jin10, the CME FedWatch Tool, which calculates probabilities based on 30-Day Fed Funds futures, shows that the probability of the Federal Reserve leaving interest rates unchanged at the June meeting is 98.4%, nearly fully pricing in a hold. The probability of a cumulative 25 basis point rate cut is just 1.6%.
Looking ahead to the July meeting, the likelihood of no rate change falls to 90.2% but remains dominant. The probability of a cumulative 25 bps rate hike rises to 8.4%, marking a return to observable levels; meanwhile, the chance of a cumulative 25 bps cut narrows further to 1.4%, indicating that rate cut expectations have almost completely evaporated. Compared with near-zero readings previously, the 8.4% hike probability has become a focal point for the market.
These figures indicate that near-term rate cuts are no longer the market consensus, and the mild uptick in hike expectations reflects cautious pricing of policy tightening by some participants. Overall, the probability of a Fed rate cut in the near term has become minimal. As of the report, attention has grown around whether the Fed might deliver a surprise hike over the summer.