Lower benchmark rates from the Federal Reserve are improbable this month, with 95% of interest rate traders expecting the federal funds rate to stay between 4.25% and 4.5%. Although potential rate cuts seemed probable earlier, President Trump's tariffs and renewed inflation concerns have altered expectations. After the positive June jobs report, another Fed meeting without cuts is expected. The labor market needs significant weakening for any rates pivot, while traders have tempered their rate cut predictions amid ongoing trade tensions and market responses.
The CME Group's FedWatch tool indicates that 95% of interest rate traders believe the federal funds rate will remain unchanged at 4.25% to 4.5% for this month.
Logan Mohtashami stated that another Federal Reserve meeting without a rate cut is highly likely following the positive June jobs report, which showed 147,000 new jobs.
Mohtashami emphasized that the labor market needs to weaken significantly for the Federal Reserve to pivot on interest rates, as it currently shows signs of softening.
About two-thirds of traders believe a rate cut could occur in September, though that figure has decreased after recent trade developments and market reactions.
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