Interest rate cut changes are now pushed out to December
June interest rate cut chances are now down to 9.3% with the first rate cut pushed out to December’s FOMC meeting.
According to the CME FedWatch Tool, the probability of interest rates ease is 9.5%, with a 90.5% of no change. The current target rate is 525-550 basis points.
The consensus is now that the first 25 basis points rate cut is pushed to December, with an 81.3% of probably of monetary policy ease.
For December, the target probability to be 500-525 basis points is 38.7%.
Investors pushed back their rate cut expectations in reaction to the latest data on the U.S. economy, which indicated that GDP only grew at an annual rate of 1.6% in the first quarter, well below the 2.2% consensus forecast. The report also showed decelerating growth and sticky inflation, leading to stagflation fears.