Bureau of Labor Statistics (BLS) monthly unemployment reports

Federal Reserve Faces Key Decision on 50 Basis Point Rate Cut This Week with 59% Chance

Sep 16, 2024, 08:17 AM

The Federal Reserve is poised to make a pivotal interest rate decision this week, with markets closely watching whether the central bank will cut rates by 25 or 50 basis points. As of now, the probability of a 50 basis point cut has risen significantly, with CME data indicating a 59% chance for the larger cut compared to a 41% chance for a 25 basis point reduction. This marks a notable shift from earlier in the week when the odds were evenly split. The decision, set to be announced on Wednesday, comes amid rising unemployment, now at 4.3%, and heightened market anticipation. The outcome is expected to have significant implications for both the domestic and global economy, as well as for various financial markets, including the bond and cryptocurrency markets. This rate cut would mark the beginning of a new easing cycle, the first since March 2020. Market pricing now suggests a 50bps cut from the Fed is now base case, with a 70% probability.