CME FedWatch indicates a low probability of rate adjustment in January

ImpermanentLossFan · 2026-01-31T04:14:32+00:00

Financial markets show high confidence that the Federal Reserve will keep interest rates unchanged in January, with only a 2.8% chance of a cut. In March, the probability of changes increases modestly but remains cautious.

ImpermanentLossFan

2026-01-31 04:14:32

Abstract generation in progress

Financial markets maintain very conservative expectations regarding short-term monetary policy. According to the CME FedWatch indicator, a widely used tool to anticipate Federal Reserve decisions, there is only a 2.8% chance of a 25 basis point cut during January. This means that the market estimates with almost complete certainty (97.2%) that interest rates will remain unchanged at the upcoming monetary policy meeting.

January: the most likely scenario is stability

The low probability of an immediate cut reflects the market’s confidence that the Federal Reserve will maintain its current stance. With a 97.2% certainty, traders virtually rule out any rate adjustments for this month. This data suggests that policymakers will continue to carefully monitor inflation and employment trends before making decisions about the cost of money.

March opens up greater room for the likelihood of changes

The outlook changes significantly when analyzing the March horizon. The probability of a cumulative 25 basis point cut increases to 15.5%, while the probability of keeping rates at their current level reaches 84.1%, according to information gathered by ChainCatcher. A more aggressive scenario, with a 50 basis point reduction, barely reaches a 0.4% probability, practically dismissed by the market.

What these expectations reveal about the Federal Reserve

These probability percentages are not random; they reflect actual transactions in federal funds futures markets. The trajectory shown by CME FedWatch suggests that the Federal Reserve could begin to consider gradual rate reductions starting in the first quarter, but without haste. The probability remains moderate even for March, indicating that the central bank aims to ensure that economic conditions justify any move toward a more expansionary policy.

For market observers, this data provides a clear window into how the financial sector anticipates the evolution of U.S. monetary policy in the coming months.

View Original

This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.