FedWatch CME Projection: Cumulative Interest Rate Cuts Will Be a Major Challenge in Early 2026

BearMarketMonk · 2026-02-05T01:18:36+00:00

Data from FedWatch CME indicates that the market has a conservative expectation of Federal Reserve interest rate policy. In January, the likelihood of a rate cut is very low, while in March, there is a slight increase in expectations but it remains dominant.

BearMarketMonk

2026-02-05 01:18:36

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Latest data from CME FedWatch tool reveals highly conservative market expectations regarding the Federal Reserve’s policy in the early quarters of the upcoming year. An in-depth analysis of the displayed probabilities indicates that rate cuts remain a scenario far from current market confidence.

January: Rate Cuts Almost Unlikely to Happen

According to FedWatch CME, the probability of the U.S. central bank cutting interest rates by 25 basis points in January is only 2.8%, a very low figure. Based on ChainCatcher reports, the chances that the Federal Reserve will keep rates at the current level are much higher, at 97.2%. This phenomenon reflects market sentiment that believes the Fed will remain hawkish in the face of persistent inflation pressures.

March: Expectations for Cumulative Cuts Are Starting to Rise, But Still Limited

When jumping to the March projections, the picture begins to show more significant changes. The probability of a cumulative 25 basis point rate cut increases to 15.5%, indicating a slight boost in market confidence. However, the likelihood of the Federal Reserve maintaining rates unchanged remains dominant at 84.2%. Meanwhile, the chance of a cumulative 50 basis point cut is practically nonexistent, recorded at only 0.4%—a figure indicating the market does not expect aggressive easing policies in the short term.

Overall, the cumulative data reflects market anticipation that remains very cautious, with the Federal Reserve expected to continue maintaining high interest rates for the foreseeable future.

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