Probability Analysis: Market Anticipates Various Rate Cut Scenarios for the Federal Reserve in 2026

The futures market maintains multiple probabilities regarding how the Federal Reserve will manage its interest rate policy throughout 2026. According to data provided by CME FedWatch, there is a small but notable 5.4% chance that no rate cuts will materialize by the end of this year. However, most traders expect moves in the opposite direction, resulting in a diverse range of probabilities.

Probabilities of Cumulative Rate Cuts Toward the End of the Year

Data collected by BlockBeats shows how market expectations are distributed based on different magnitudes of cumulative rate reductions. There is a 21.1% chance that cuts will be limited to 25 basis points, while there is a 32.5% chance of a 50 basis point reduction, which is the most likely scenario according to these probabilities.

Expanding the range of expectations, the probabilities indicate a 25.9% chance of a 75 basis point cut, an 11.7% chance of a 100 basis point decrease, and a lower 3% chance of cumulative cuts totaling 125 basis points. This spectrum of probabilities reflects market uncertainty and the multiple economic scenarios that could influence monetary policy decisions.

Immediate Expectations for the March Meeting

Looking ahead to the Federal Reserve’s upcoming meeting scheduled for March, the probabilities show a 23.2% chance of a 25 basis point cut during that session. This more near-term data allows traders and analysts to anticipate immediate moves that could be related to short-term economic dynamics.