Odds of a December Interest-Rate Cut Jump After Inflation Matches Expectations

Traders saw a 79.1% chance of a December cut shortly following the CPI, which was up from 58.7% on Tuesday, according to the CME FedWatch Tool. The odds for rates to hold steady through the end of the year were down to 20.9% from 41.3% on Tuesday.

“No surprises from the CPI, so for now the Fed should be on course to cut rates again in December,” writes Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management. “Next year is a different story, though, given the uncertainty surrounding potential tariffs and other Trump administration policies. The markets are already weighing the possibility that the Fed will cut fewer times in 2025 than previously thought, and that they may hit the pause button as early as January.”