Markets See 96% Chance of Fed Rate Cut in September
Expectations for a Federal Reserve rate cut in September have reached overwhelming consensus, with the CME FedWatch Tool showing a 95.6% probability of a 25-basis-point reduction.
Markets are now almost fully pricing in a move that would bring the federal funds target range down to 4.00–4.25%, from the current 4.25–4.50%.
The probability of the Fed holding rates steady has dwindled to just 4.4%, according to CME data. That leaves investors with little doubt about the Fed’s next move, suggesting policymakers are set to deliver their first cut since the tightening cycle ended.
Polymarket Traders Echo CME Outlook
Prediction markets reflect similar sentiment. On Polymarket, wagers on a 25-basis-point cut dominate, with traders assigning an 86% likelihood to that outcome. Only 11% expect no change, while just 4.5% are betting on a deeper 50-basis-point reduction. Virtually no one is pricing in the chance of a hike.
The Polymarket chart shows conviction has strengthened since August, with traders steadily shifting toward the smaller cut as the most probable scenario.
Why the Cut Looks Locked In
The shift in odds underscores confidence that the Fed is preparing to pivot more decisively toward supporting growth after inflation cooled in recent months. Policymakers have been signaling patience but also acknowledging that keeping rates too high for too long risks a sharper slowdown.
Markets now appear to see September’s move as the beginning of a broader easing cycle that could stretch into 2026, with investors closely watching Powell’s press conference for hints on the pace of future cuts.
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Alexander Zdravkov is a person who always looks for the logic behind things. He has more than 3 years of experience in the crypto space, where he skillfully identifies new trends in the world of digital currencies. Whether providing in-depth analysis or daily reports on all topics, his deep understanding and enthusiasm for what he does make him a valuable member of the team.
