Markets assign low probability to Fed rate cut in March

CountdownToBroke · 2026-02-22T13:11:33+00:00

The chances of rate cuts by the Federal Reserve are low in March, increasing towards April and June. In March, only 17.7% anticipate a cut. By June, the probability of cuts reaches 50.4%, reflecting a gradual shift in market expectations.

CountdownToBroke

2026-02-22 13:11:33

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According to updated data from CME’s Federal Funds Futures Monitor, the likelihood that markets anticipate a rate cut remains low for the upcoming month, while expectations increase as the time horizon extends. These indicators, compiled by Jinshi, reveal current bets by traders and investors regarding the monetary policy decisions the Federal Reserve will make in the coming months.

March: Limited short-term probability

The probability that the Federal Reserve will cut rates by 25 basis points in March is only 17.7%, indicating market skepticism about immediate changes in monetary policy. In contrast, the chance that rates will remain unchanged is dominant, at 82.3%. This scenario reflects that traders do not expect aggressive moves next month, prioritizing a wait-and-see stance by the monetary authority.

April shows a gradual shift in adjustment probability

As we move into April, market expectations begin to change. The cumulative probability of 25 basis point cuts rises to 32.4%, representing a significant increase compared to March. Simultaneously, the likelihood of maintaining stable rates decreases to 63.5%. Additionally, there is a 4% chance of more aggressive 50 basis point cuts, indicating that part of the market anticipates a more decisive move at that time.

June consolidates the probability of policy changes

Looking ahead to June, the cumulative probability of a 25 basis point reduction continues to grow, reaching 50.4%. This suggests that the market sees a nearly balanced scenario where rate cuts are as likely as no change. The increasing trend of probabilities from March through June demonstrates how traders anticipate a gradual transition toward a more accommodative monetary policy as the year progresses.

Market expectations, reflected in these probabilities, respond to economic data and signals from the Federal Reserve, providing a clear picture of where traders are positioning their bets on the future direction of U.S. interest rates.

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