Topline
Betting odds suggest an interest rate cut from the Federal Reserve later this week is all but guaranteed, as Wall Street anticipates looser monetary policy after recent economic data showed the job market has continued to deteriorate.
Brokerages and betting markets expect the central bank to cut rates for a third time this year, reversing a hawkish stance.
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Key Facts
The blockchain-based betting site Polymarket offered 95% odds the Federal Reserve would cut interest rates by 25 basis points as of Monday, which would lower rates to a range of 3.5% to 3.75%, a 6% chance of no change and a less-than-1% chance of a larger reduction or of interest rates increasing.
Polymarket rival Kalshi offered 93% odds of a 25-basis-point cut to interest rates and a less than 1% chance of a larger cut, reversing course after odds fell to as low as 25% in November.
Traders have priced in a nearly 90% chance of a quarter-point interest rate cut, according to CME’s FedWatch tool, after odds fell below 40% last month.
Several brokerages have reversed their calls on the Fed decision, including JPMorgan, Morgan Stanley, Nomura and Standard Chartered, which now expect a rate cut after previously telling investors they expected the central bank to hold rates as is.
What To Watch For
The Federal Reserve will announce Wednesday at 2 p.m. EST whether policymakers voted to lower interest rates.