Fed Watchers Eye September as Tension Builds Around Central Bank Cuts

CN
9 hours ago

Global markets will be tuned in this week as the Bank of Japan, Riksbank, and U.S. Federal Reserve prepare to make their latest calls on interest rates. The Fed’s meeting is set for June 18, and according to CME’s Fedwatch tool, the odds of a quarter-point cut are practically nonexistent—just 0.1%. A hefty 99.9% of CME’s futures are betting the central bank keeps the federal funds rate the same.

Both Polymarket and Kalshi traders are placing low odds on a rate cut this month. Looking ahead to the July 2025 FOMC meeting, CME’s Fedwatch tool pegs the chance of a quarter-point trim at just 14.5%, with prediction markets echoing that at 14%. CME’s Fedwatch forecasts shift in September, where the probability of a 25 basis point (bps) cut jumps to 57.6%, and the odds of a half-point move clock in at 8.8%.

Turning to CME Fedwatch projections for October, the likelihood of a quarter-point cut sits at 45.3% as of June 16. A 50bps cut is currently priced at 33.8%, while the odds of a three-quarter-point slash are at 4.5%. Over on Polymarket, data tied to the Sept. 17 Fed meeting suggests most traders expect no change, with a 55% probability—up two points.

The chance of a 25bps trim is 40%, down three points, and only 4% see a 50bps cut on the table. A mere 1% think the Fed will actually raise rates by 25bps or more. The market has drawn $1.48 million in total trading volume. Though opinions vary on Polymarket, traders on the prediction site are putting the odds of Fed Chair Jerome Powell getting the boot this year at just 10%.

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