The markets are unanimously expecting the FOMC at its 2-day meeting that begins today to leave its funds rate target range unchanged at 5.25%/5.50%. However, the markets are still on guard for one last rate hike this year.
Specifically, the markets are discounting the odds at 29% that the FOMC at its next meeting ending on November 1 will implement a +25 bp rate hike, and at +15% for that +25 bp rate hike at the following meeting that ends on December 13. Starting in 2024, the markets are not looking for any rate hikes, and are instead discounting roughly a -50 bp rate cut in 2024 from the current level and a further -50 bp rate cut in 2025.
