Following a hotter-than-expected Consumer Price Index (CPI) report, market expectations for Federal Reserve rate cuts have significantly shifted. Initially, the probability of a March rate cut stood at 81%, but has since plummeted to figures as low as 3.5% and 5.5%, with some sources citing a drop from 70% to 8% and others to 9%. Similarly, the likelihood of a May rate cut has decreased from 50% to 35%, with the market now anticipating only 3 to 4 cuts throughout the year. This adjustment in expectations comes as the CPI data suggests stronger inflationary pressures than previously anticipated, leading traders to adjust their forecasts for the Federal Reserve's monetary policy actions.
THERE IS NOW ONLY A 8% CHANCE THAT THE FED WILL START CUTTING RATES IN MARCH THIS IS DOWN FROM 70% + JUST A MONTH AGO https://t.co/tlCqlMNpzD https://t.co/zaQWqkWrOi
CPI came in hotter than expected, markets are down a bit. Watching strong performers during this dip.
US rate cut expectations dramatically lower after hotter CPI in the US March odds now 9% vs 18% yesterday May odds now just 30% vs 50% yesterday
The probability of a March rate cut moved down to 9% after the hotter-than-expected inflation report. Only a month ago the probability was 77%. https://t.co/TCiv7Y1Pts
After the hotter-than-expected CPI print, traders all-but price out the chance of a March rate cut. https://t.co/3ysBsb3IjZ
At the beginning of this year, odds for a March rate cut were at 81% After today's CPI print, odds for a March rate cut have fallen to just 5.5%
May rate cut probability down to 35% and market now predicting close to only 3-4 cuts this year
Fed March cut probability has finally fallen to 3.5%... https://t.co/laUK9n9Z6r