What are the Fed's interest rate expectations for next year? CME data reveals three major probabilities.

According to the latest data from CME “Fed Watch”, the market's expectations for the Fed's policy next year are starting to show differences.

First, let's look at the situation in January: The probability of the Fed cutting interest rates by 25 basis points is only 19.9%, which means the market believes that at the beginning of the new year, there is a high likelihood that the Fed will remain inactive. The probability of maintaining the interest rate is as high as 80.1%, reflecting a cautious attitude under the current inflation situation.

As we look forward to March, the situation has become complicated. The market estimates the probability of a cumulative rate cut of 25 basis points at 44.7%, but the probability of keeping the interest rate unchanged is still 47.1%—indicating that rate cut expectations are still wavering. However, there are also more aggressive voices suggesting a potential cumulative rate cut of 50 basis points, but the probability of this scenario is only 8.2%.

For the crypto market, the Fed's interest rate decisions directly affect the liquidity environment. Tightening expectations usually mean pressure on funding, while the opposite may create space for risk assets. This data is worth ongoing attention.