September Fed 25-Basis-Point Cut Odds Drop to 92.1% Amid Hot PPI Data

According to the CME Group’s FedWatch tool, the probability of a 25-basis-point interest rate cut by the Federal Reserve in September has slightly decreased to 92.1% as of the latest update, from near certainty following the release of stronger-than-expected U.S. producer price index (PPI) data in early August [1]. The probability of the Fed maintaining rates unchanged for the time being now stands at 7.9%. This shift has tempered some of the market’s optimism about a more aggressive 50-basis-point cut, which is now nearly ruled out [2].

The adjustment in market expectations reflects a recalibration of sentiment in response to economic signals that suggest inflationary pressures remain resilient [3]. The latest PPI data, which hit a three-year high, has raised concerns about the Federal Reserve’s ability to confirm a consistent cooling of price pressures before committing to a rate cut [4]. Despite this, the expectation for a modest rate cut remains firmly in place, with traders adjusting their positions in response to the evolving data landscape.

Gold prices, typically sensitive to interest rate expectations, have shown some vulnerability, with prices falling on Thursday as a modest rise in U.S. Treasury yields reduced the appeal of non-yielding assets [5]. Asian markets initially reacted negatively to the hot PPI reading before recovering as traders increasingly priced in the likelihood of a 25-basis-point cut [6].

The narrowing confidence in the 25-basis-point cut—although still high—demonstrates how sensitive financial markets remain to any indication that the Fed may delay or alter the pace of its monetary easing. Investors are now focused on upcoming inflation and employment reports for further clarity on the central bank’s policy direction.

Source:

[1] Asia markets stumble as hot PPI print reins in Fed rate cut hype (https://www.msn.com/en-us/money/markets/asia-markets-stumble-as-hot-ppi-print-reins-in-fed-rate-cut-hype/ar-AA1Kyn4P?ocid=finance-verthp-feeds)

[2] US PPI hits three-year high and hits interest rate cut expectations (https://www.trendx.tech/news/us-ppi-hits-three-year-high-and-hits-interest-rate-cut-expectations-2519654)

[3] US PPI hits three-year high, impacting rate cut expectations (https://www.coinlive.com/news/us-ppi-hits-three-year-high-impacting-rate-cut-expectations-crypto)

[4] 美联储在九月份降息25个基点的概率略微下降至92.1% (https://www.moomoo.com/hans/news/flash/20917566/the-probability-of-a-25-basis-points-interest-rate-cut)

[5] Copper falls on concerns over weak Chinese data (https://energynews.oedigital.com/mineral-resources/2025/08/15/copper-falls-on-concerns-over-weak-chinese-data)

[6] Asia markets recover after hot U.S. price data (https://energynews.oedigital.com/energy-markets/2025/08/15/asia-markets-recover-after-hot-us-price-data)