Traders Anticipate Fed’s 25 Bps Rate Cut in September, According to Reuters

Traders Anticipate Fed Interest Rate Cuts Following Labor Market Insights

Recent remarks from Federal Reserve Governor Christopher Waller have led traders to anticipate a potential quarter-point cut in interest rates this month, with expectations for a more substantial adjustment in the next meeting. Waller indicated that the latest labor market data suggests it may be appropriate to lower rates, and he expressed openness to a larger cut if future data supports such a move.

Currently, traders assign a 70% probability to a quarter-point reduction this month, based on futures pricing. They are projecting a Fed policy rate range of 4.5%-4.75% by the upcoming November meeting, marking a shift from the current range of 5.25%-5.50%, which has been maintained for over a year.