Well, it looks like the markets are placing their bets. And it’s a pretty strong one. According to the latest numbers from the CME’s FedWatch Tool, there’s now an 86.4% chance the Federal Reserve will cut interest rates come September.
That’s a huge majority. It means traders are almost certain it’s going to happen. The other option—that rates just stay put—is sitting at a mere 13.6%. It feels like the decision is already made, at least in the minds of investors.
Where Rates Are Headed
The current federal funds rate target is sitting between 4.25% and 4.50%. If the Fed does move, the data suggests it’ll be a standard quarter-point cut. That would nudge things back down to a range of 4.00% to 4.25%. A bigger, half-point cut? It’s just not on the table right now. Nobody’s really talking about that possibility.
What’s interesting is how this expectation has built up. It wasn’t always a sure thing. Just a week ago, the probability was a bit lower, around 84.7%. Go back a month, and it was a complete coin toss—only 46.7% thought a cut was coming. The fact that it’s jumped so high, so fast, tells you something about the shifting mood.
The Political Pressure Cooker
Of course, it’s impossible to ignore the noise from the White House. President Trump has been publicly, and pretty aggressively, pushing Fed Chair Jerome Powell to lower rates. There was even talk of firing him at one point, though that’s a complicated process.
But here’s the thing. Powell doesn’t have a magic button. The call on rates is made by a committee vote. The political pressure is a real factor, but it’s just one part of a messy equation.
Speaking of the committee, there’s been some recent drama there, too. Trump dismissed Fed member Lisa Cook over allegations of mortgage fraud. But she didn’t just go quietly—she’s filed a lawsuit challenging the decision. It adds another layer of uncertainty to an already tense situation.
The Countdown Begins
With the next Fed meeting about 17 days out, it seems the markets have already made up their collective mind. A rate cut is largely priced in. It would be a major surprise if it didn’t happen at this point.
But the Fed has surprised us before. They have their own data to consider, their own view of the economy. While everyone else seems sure, they’re the ones who actually have to make the call. We’ll just have to wait and see.
*This is news reporting, not a recommendation for any investment action.
