Odds Of December FOMC Rate Cut Fall Below 50%

Traders continue to pare bets that the Federal Reserve will cut rates at its next meeting, with the odds now below 50%. The probability of a rate cut at the Fed's December 10th meeting is now 47.4%, down from 62.8% last week and 96% last month.

This sharp decline is partly due to the recent U.S. government shutdown, which has limited the availability of economic data. As a result, Federal Reserve officials feel they are "flying blind." Additionally, inflation remains somewhat elevated.

Susan Collins, a voting member of the Federal Open Market Committee (FOMC) and considered a centrist, expressed caution about further rate cuts given the lack of data. "Absent evidence of a notable labor market deterioration, I would be hesitant to ease policy further, especially given the limited information on inflation due to the government shutdown," Collins said in prepared remarks on Wednesday.

The Fed has cut rates at its last two meetings, bringing the federal funds rate down to 3.75–4%. However, Fed Chair Jerome Powell emphasized that a rate cut in December is "not a foregone conclusion, far from it."

With about four weeks remaining until the next FOMC meeting and a series of key economic reports now scheduled for release, market expectations could shift quickly. For now, however, traders are taking a more cautious approach about the possibility of a year-end rate cut.

Source: Yahoo Finance