CME FedWatch, a key tool for gauging market expectations on Federal Reserve rate changes, now shows a 74.5% probability of an interest rate cut in December, marking a significant increase from previous estimates.
As of Monday, Dec. 2, the tool surged by 8.5 percentage points from the 66% chance reported on Nov. 29, signaling that investors anticipate the Fed will announce a 0.25% rate cut, bringing the target range to 4.25% to 4.5% during its meeting on Dec. 17 and 18.
The Federal Reserve currently holds rates between 4.5% and 4.75%, following a series of cuts earlier this year that reduced rates by 0.75%, after reaching their highest levels in over two decades.
Such rate cuts tend to be viewed as positive for assets like Bitcoin, as the lower borrowing costs generally encourage investment in riskier assets, including cryptocurrencies.
The CME FedWatch tool tracks the likelihood of interest rate moves by analyzing pricing data from 30-day futures contracts tied to the Federal Reserve’s rate decisions.
The rising probability of a rate cut follows comments made by Federal Reserve Governor Christopher Waller on Dec. 2 during a speech at a monetary policy conference in Washington, DC. Waller indicated that he leans toward supporting a rate cut but noted that the decision will depend on incoming data, particularly regarding employment, consumer spending, and inflation, which could influence his outlook.
Waller further explained that he would consider the economic data leading up to the December meeting before making a final decision on whether to advocate for a rate cut or hold rates steady.
In parallel, New York Federal Reserve President John Williams expressed expectations for lower interest rates “over time” but refrained from commenting on his stance for the December meeting.
Last month, Federal Reserve Chair Jerome Powell stated that there was no immediate need to rush into lowering rates, though his position may be updated during a public discussion in New York on Dec. 4.
Meanwhile, Bitcoin has experienced a notable rise this year, with its price more than doubling, largely driven by optimism surrounding the US market and the expectation of crypto regulatory changes under President Donald Trump’s administration.
Despite a slight 2% dip in the past 24 hours, bringing Bitcoin to around $95,800, many analysts predict it could surpass $100,000 before year’s end.
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