The CME FedWatch Tool has the odds of the Federal Reserve beginning its interest rate cut cycle at its September 18 meeting at 100%. And there are greater than three-in-four odds that it will lower interest rates by at least 100 basis points (1%) by the end of the year.
The central bank is expected to keep lowering rates throughout 2025. As you can see in the chart below, there’s a 50% chance that the fed funds rate will be in the 2.75%-3.25% range by the end of 2025.
Today, the fed funds rate is sitting between 5.25% and 5.50%. That means the market is pricing in at least 200 basis points worth of rate cuts through next year.
Now, let’s put that into context…
The FedWatch Tool had previously expected the Fed to begin lowering rates several months ago, but that never happened. So a lot – and I mean a lot – can happen over the next 16 months. I’ll keep you up date here in Market Insights, and becoming a member of my premium investment newsletter The McCall Letterwill put you in an even better position for success.
But in the meantime… what does all this jargon mean for you?!
Everyone knows that the Fed is embarking on a rate cut cycle. Is that good or bad for stocks? And considering there’s always a bull market somewhere, where might that be over the next 16 months?
I cover all that and more in today’s video update.
I also discuss the potential of a “sell the rumor” scenario – in which investors buy now ahead of the cut cycle beginning and then sell when it actually happens. Plus, which sectors you should focus on as that September meeting date gets closer.
Check out the video below for more…
Here’s to the future,
Matt McCallEditor, Market Insights
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