Fed Rate Cut Unlikely: Market Prices in No Change by March

The probability of a 25 basis point interest rate cut by the Federal Reserve in March is only 2.5%, according to CME's "FedWatch" data released after the CPI data. This indicates a high likelihood of no change in the federal funds rate, with a probability of 97.5%.

The market is also pricing in a low probability of a total 50 basis point rate cut by the Fed by May, with a probability of only 0.2%. The probability of a total 25 basis point rate cut by May is 11.7%, while the probability of no change is 88.1%.

These probabilities suggest that the market expects the Federal Reserve to maintain a cautious stance on monetary policy in the near term. The low probability of a rate cut indicates that the market is not anticipating a significant shift in the Fed's policy stance, which could be influenced by various economic indicators and geopolitical factors.

The Federal Reserve has been closely monitoring economic indicators, including inflation and employment data, to assess the appropriate monetary policy stance. The recent CPI data may have contributed to the market's expectations of no change in the federal funds rate. However, the Fed's policy decisions will ultimately be based on its assessment of the economic outlook and its mandate to promote maximum employment and stable prices.

The market's expectations for the Federal Reserve's monetary policy stance are subject to change, as new economic data and geopolitical developments may influence the Fed's policy decisions. Investors and market participants should closely monitor the Fed's communications and economic data releases to stay informed about the potential direction of monetary policy.