Data from the CME FedWatch tool now points to a mere 71.3% probability of the Fed cutting interest rates by 25 basis points in September, down from 94% last week.
Investors are keenly eyeing Federal Reserve Chair Jerome Powell’s speech at Jackson Hole on Friday for clues about the central bank’s monetary policy trajectory amid President Donald Trump’s calls for an interest rate cut.
Data from the CME FedWatch tool now points to a mere 71.3% probability of the Fed cutting interest rates by 25 basis points in September, down from 94% last week.
Inflation risk due to President Trump’s tariffs has been central to the Federal Open Market Committee’s (FOMC) policy discussions. During the July meeting, nine out of 12 FOMC members expressed concerns about the risks to the Fed’s dual mandate of employment growth and keeping inflation under 2%. The members noted “considerable uncertainty” about the timing, magnitude, and persistence of tariff-related effects on the U.S. economy.
However, not everyone is sold on the tariffs-induced inflation being the primary concern. Fed’s Christopher Waller and Michelle Bowman were more concerned about the labor market weakness, and they dissented during the July FOMC meeting, where the Fed decided to keep rates unchanged.
Earlier on Wednesday, David Zervos, one of the 11 Federal Reserve Chair candidates, backed President Trump and Treasury Secretary Scott Bessent’s calls for interest rate cuts.
“We really need to get rates back to a more neutral level,” Zervos said, while noting that the Fed’s current monetary policy is too restrictive.
Meanwhile, U.S. equities edged up in Friday’s pre-market session. At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was up 0.29%, while the Invesco QQQ Trust (QQQ) gained 0.23%. Retail sentiment around the S&P 500 ETF on Stocktwits was in the ‘bullish’ territory.
The iShares 7-10 Year Treasury Bond ETF (IEF) was up 0.13% at the time of writing.
For updates and corrections, email newsroom[at]stocktwits[dot]com.<