Summary
- Kalshi reported that the U.S. Federal Reserve's benchmark interest rate has an 85% chance of being cut three times this year.
- Market rate-cut expectations are at a year-high, citing the recent slowdown in the Consumer Price Index and the rise in the unemployment rate as the main reasons.
- Some Fed officials said they remain cautious about inflationary pressures.
The U.S. Federal Reserve (Fed) was shown to have an 85% chance of cutting the benchmark interest rate three times this year. Market expectations for rate cuts have risen to their highest level of the year.
On the 24th (local time), according to Kalshi, a prediction market platform based on virtual assets (cryptocurrencies), the probability of three cuts to the benchmark rate this year was calculated at 85% in the federal funds futures (Fed Fund Futures) market. This is the highest level since the statistics for that indicator began to be compiled.
Market participants expect the Fed to shift to an early easing stance based on the recently released slowdown in the Consumer Price Index (CPI) and the rising unemployment rate. According to Chicago Mercantile Exchange (CME) FedWatch data, the probability of a rate cut has risen significantly from 68% a month ago.
However, some Fed officials maintain that a cautious approach is necessary, saying "inflationary pressures have not been completely resolved."
JH Kim
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