As Federal Reserve Chair Jerome Powell and the rest of the Federal Open Market Committee (FOMC) assemble this morning to start their two-day policy-setting meeting, there’s not much suspense priced into fed funds futures. As of this writing, the CME FedWatch tool is reflecting a 100% chance of a rate cut this week, with 96% odds for a 25 basis point cut to 4.00%-4.25%.
Currently, there’s only a 4% chance priced in for a “jumbo” rate cut of 50 basis points, which would bring the benchmark range down to 3.75%-4.00% from the current 4.25%-4.50%. That means the Fed does have some room to surprise markets if they decide to ease more generously than expected.
