Market already sees a 25% chance of the Fed maintaining interest rates in 2024, shows CME

The hypothesis of a reduction of 0.25 percentage points increased from 38.8% to 41.4%, while the hypothesis of a drop of half a percentage point decreased from 30.1% to 25.5%

The risk of the Federal Reserve (Fed, the North American central bank) maintaining interest rates in the range between 5.25% and 5.50% throughout 2024 reached 25% this Tuesday, as pointed out by the platform monitoring by CME Group. The tool, however, still points out that the most likely scenario is for the monetary authority to determine a single cut of 25 basis points in the period.

Recently, the resource indicated a 25.0% probability of interest rates remaining at the current level until December, compared to 18.4% the day before. At the same time, the hypothesis of a reduction of 0.25 percentage points increased from 38.8% to 41.4%, while the hypothesis of a drop of half a percentage point decreased from 30.1% to 25.5%.

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The reassessment follows concerns regarding the trajectory of inflation in the US, which has been persistent. This morning, the acceleration of the employment cost index renewed fears about inflationary pressures. There is expectation for tomorrow’s Fed decision, which is expected to maintain interest rates, but may signal future plans.