The financial market has increased the bets on a cumulative cut of 75 basis points (bp) by December by the Federal Reserve (Fed, the U.S. central bank) and made this scenario the main one, following the reading of the CPI (Consumer Price Index) in the U.S.
According to the monitoring tool of CME Group, the estimated chance of a 75 bp rate cut by the end of the year was 55.1% at around 9:35 AM (Brasilia time). Before the data, the probability was 41.3%.
The chance of a smaller cut, of 50 bp, fell from 43.9% to 37.4%, while the chance of a 25 bp reduction dropped from 13.5% to 7.2%. The scenario of maintaining interest rates throughout the year became practically nil at the same time, after dropping from 1.3% to 0.4% probability.
