Fed Likely to Keep Rates Unchanged in June at 97.4%

The probability of the Federal Reserve keeping interest rates unchanged in June was 97.4%, according to the latest data from CME's "FedWatch." This high probability indicates a strong consensus among market participants that the Fed will maintain its current monetary policy stance in the near term. The remaining 2.6% probability is allocated to a potential 25 basis point rate cut, suggesting that while a rate cut is possible, it is considered highly unlikely.

This data reflects the current economic environment and the Fed's cautious approach to monetary policy. The Fed has been closely monitoring various economic indicators, including employment data, inflation rates, and overall economic growth, to determine the appropriate course of action. The high probability of rates remaining unchanged suggests that the Fed is satisfied with the current economic conditions and does not see an immediate need for policy adjustments.

Looking ahead to July, the probability of the Fed keeping interest rates unchanged drops to 69.2%. This shift indicates that market participants are beginning to consider the possibility of a rate cut in the coming months. The cumulative probability of a 25 basis point rate cut in July is 30.0%, while the probability of a 50 basis point rate cut is 0.8%. These figures suggest that while a rate cut is more likely in July compared to June, the market still expects the Fed to proceed with caution.

The data from CME's "FedWatch" provides valuable insights into market expectations regarding the Fed's monetary policy. The high probability of rates remaining unchanged in June reflects the current stability of the economy and the Fed's cautious approach to policy adjustments. As the economic landscape continues to evolve, market participants will closely monitor the Fed's actions and adjust their expectations accordingly. The shift in probabilities for July indicates that while a rate cut is possible, the market still expects the Fed to maintain a cautious stance in the near term.