According to CME's FedWatch Tool data, the probability of a Fed rate cut in September has reached 86.4%, drawing attention in financial markets.
Current Interest Rate Situation
The current target range for the federal funds rate stands at 4.25% to 4.50%. Data analysis suggests that a 25 basis point cut would likely bring the rate back to 4.00% to 4.25%. A 50 basis point cut is not currently considered a realistic possibility.
Comparison with Previous Periods
Comparisons from previous periods indicate a growing expectation of a rate cut. A week ago, the probability of a cut was 84.7%, while a month ago it was 46.7%. Conversely, the probability of keeping rates at the current level was 52.4%, which has now fallen to 13.6%.
Political and Influencing Factors
Political factors also play a significant role in rate decisions. U.S. President Donald Trump is putting considerable pressure on Fed Chair Jerome Powell to cut rates, even considering Powell's dismissal. However, rate decisions are made through a vote within the Fed. Recently, Fed member Lisa Cook was dismissed by Trump over allegations of mortgage fraud, but she subsequently filed a lawsuit regarding the decision.
With the next Fed meeting approximately 17 days away, markets have largely priced in the expectation of a rate cut.
