Welcome to Extreme Investor Network, where we bring you the latest and most valuable insights in the world of finance. Today, we’re diving into the hot topic of interest rate cuts by the Federal Reserve.
According to the CME FedWatch tool, traders are now 100% certain that the Federal Reserve will cut interest rates by September. The odds are currently at 93.3% for a quarter percentage point cut and 6.7% for a half percentage point cut. This increased certainty was sparked by the consumer price index update for June, which showed a 0.1% decrease from the prior month, leading to the lowest annual inflation rate in three years.
The CME FedWatch Tool calculates these probabilities based on trading in fed funds futures contracts, reflecting where traders are placing their bets on the effective fed funds rate. Federal Reserve Chairman Jerome Powell’s recent hints have also reinforced traders’ beliefs that the central bank will act by September. Powell stated that the Fed wouldn’t wait for inflation to hit its 2% target rate before cutting, emphasizing the importance of gaining “greater confidence” in inflation returning to that level.
The Fed’s next decisions on interest rates are scheduled for July 31 and September 18, with no meeting in August. With all eyes on the Fed’s upcoming decisions, it’s crucial for investors to stay informed and prepared for potential market movements.
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