US interest rate cut in December rises to 74.5% probability: Fedwatch

CME FedWatch, a tool used to measure expectations for a Federal Reserve rate change, has tipped the likelihood of an interest rate cut in December to 74.5%, up from earlier estimates. 

On Monday, Dec. 2, the market tracking tool jumped 8.5 percentage points from its 66% probability on Nov. 29, for the expectation that the Fed would announce a 0.25% rate cut to a target of 4.25% to 4.5% when it meets on Dec. 17 and 18.

Currently, the US central bank has rates set at a target of 4.5% to 4.75% after dropping the rate by 0.75% across two cuts this year, bringing it down from an over 20-year high.

Fed cuts are seen as bullish for Bitcoin (BTC) as the low cost of borrowing money has historically incentivized investors to trade riskier assets like cryptocurrencies.

The CME FedWatch tool tracks the probability of rate moves through 30-day futures pricing data on the Fed’s interest rate.

The market’s heightened probability of a cut comes after Federal Reserve Governor Christopher Waller said in a Dec. 2 speech at a monetary policy conference in Washington, DC, that “at present, I lean toward supporting a cut.”

However, he added, “The decision will depend on whether the data we receive before then surprises us to the upside and alters my forecast for the path of inflation.”

Related: Trump’s inauguration could mark local top for crypto, research shows 

Waller said a slew of data to come before the Fed’s meeting on employment, consumer spending and inflation “will help me decide whether to cut or skip.”

The New York Fed Bank President John Williams told the Queens Chamber of Commerce in New York on Dec. 2 that he also expects interest rates to lower “over time” without saying if he would back a cut at the meeting.

Federal Reserve Chair Jerome Powell last month said there aren’t “any signals that we need to be in a hurry to lower rates,” but he’s expected to make fresh public comments on a rate cut at a public discussion in New York on Dec. 4.

Meanwhile, Bitcoin’s price has also more than doubled so far this year amid renewed market optimism in the US, largely boosted by the election of Donald Trump who has promised to overhaul crypto regulations.

Bitcoin is down around 2% over the last 24 hours to around $95,800, but many analysts expect it to reach $100,000 before the end of the year.

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