Fed Watch: January Rate Cut Looking Increasingly Unlikely 📉
Hold tight on those interest rate cut expectations—at least for January. According to the latest market-implied probabilities, there’s now an 88% chance the Federal Reserve will hold rates steady at its first meeting of the year. That’s a pretty strong signal from traders and economists that a near-term cut isn’t in the cards. ✅
The Fed is clearly taking a patient, data-dependent stance. With inflation metrics still hovering above their 2% target and the U.S. job market remaining resilient, policymakers have little urgency to ease up just yet. This high probability reflects recent economic reports and cautious commentary from Fed officials themselves, who’ve emphasized the need for “greater confidence” that inflation is sustainably moving lower.
What’s interesting is how quickly the narrative has shifted from when the first cut will happen to if it will happen this winter. Just a couple of months ago, markets were pricing in a much higher likelihood of a March—or even January—kickoff to the rate-cut cycle. Now, attention is turning more squarely toward the May or June meetings as the potential starting line, assuming inflation continues its gradual cool-down.
This isn’t just a U.S. story. Central banks worldwide, from the ECB to the Bank of England, are also in a holding pattern, weighing strong labor data against slowing price growth. The Fed’ upcoming decisions will undoubtedly influence global monetary policy momentum as we move deeper into 2024.
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