Traders Maintain Rate-Cut Bets Despite Powell’s Hawkish Tone

Federal Reserve Chair Jerome Powell might not be in a rush to cut interest rates but traders aren’t taking that as much of a signal for December.

The chances of a quarter-point rate cut at this month’s Fed meeting stood at 74% early on Thursday, only down marginally from 78% the previous day, according to the CME FedWatch tool. However, the market is largely pricing in a wait-and-see decision in January.

“Powell…reiterated the view that a slower pace of interest rate cuts may be appropriate moving forward as the US economy seems to be stronger than what the Bank had expected in September. That’s probably why the probability of a pause in January remained elevated at 62%,” said Charalampos Pissouros, an analyst at XM.