Federal Reserve Interest Rate Projections from January to March: Stable Scenario Now, Flexible Later

SolidityJester · 2026-01-31T01:17:17+00:00

Since November, financial markets have closely monitored the Federal Reserve's next steps, with January showing a 95% probability of maintaining interest rates. By March, the chance of a 25 basis point cut rises to 15.4%, indicating a potential shift towards more flexibility in monetary policy.

SolidityJester

2026-01-31 01:17:17

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Since November, when the Federal Reserve announced its previous interest rate policy, the financial markets have been closely monitoring the central bank’s next move. The latest data from the CME FedWatch tool shows a clear market expectation for the upcoming period.

For January, the probability that the Federal Reserve will keep interest rates at the current level reaches 95%, while the chance of a 25 basis point cut is only 5%. This indicates that the market community believes the central bank will take a status quo approach at the beginning of the year, maintaining stability after a series of previous rate decisions.

However, the outlook changes when looking at the projections for March. The likelihood of a cumulative 25 basis point cut increases significantly to 15.4%, while the probability of holding rates steady drops to 84.1%. The chance of a more aggressive 50 basis point cut remains minimal at 0.6%, suggesting that a double cut scenario is still considered a dark horse in the market.

This CME data reflects expectations that the Federal Reserve is likely to start adjusting interest rates toward a more flexible stance after January, although significant changes are still considered unlikely in the near future.

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