📉 Fed Rate‑Cut Bets Shift — January Cut Odds Fall Sharply
Markets pare expectations for a January rate cut as U.S. economic data cools enthusiasm.
Traders and economists are dialing back expectations for a Federal Reserve interest rate cut at the January FOMC meeting, with the probability of a cut now quite low. Instead, markets are bracing for a pause in early 2026 monetary easing amid stronger macro data and hawkish signals from officials.
• 📉 Lower odds: Probability of a 25 bps Fed rate cut in January is now modest (~<20 %), with futures markets pricing most weight on unchanged policy.
• 📊 Fed pause view: According to FedWatch tools, markets see a high chance rates stay where they are — with only limited cuts priced for later in 2026.
• 📈 Macro backdrop: Strong GDP and mixed labor data have tempered expectations for near‑term easing, even after three cuts in 2025.
“Markets are increasingly signaling that the Fed may hold rates steady into early 2026, rather than delivering immediate cuts, as resilient economic data complicate the easing narrative.
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