Federal Reserve Interest Rate Outlook: Conditional Probability Reveals Rate Cut Expectations

MiningDisasterSurvivor · 2026-02-14T00:04:13+00:00

According to CME data, market expectations for the Federal Reserve's future policy have changed significantly. The probability of holding interest rates steady in March is as high as 84.7%, with expectations of rate cuts increasing in April. By June, the likelihood of a 50 basis point rate cut has noticeably risen, reflecting the market's cautious attitude toward the Federal Reserve's future actions.

MiningDisasterSurvivor

2026-02-14 00:04:13

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Based on data from CME’s “FedWatch” tool, the market assesses future Federal Reserve policy directions using conditional probabilities. In March, the probability of the Fed holding interest rates steady is as high as 84.7%, with only a 15.3% chance of a 25 basis point rate cut. By April, the conditional probabilities show that expectations for a rate cut are beginning to rise, with the combined probability of a 25 basis point cut increasing to 29.0%, while the probability of holding rates steady decreases to 68.0%.

Looking further ahead to June, the market’s conditional probability expectations show a clear divergence. About 49.5% of the probability points to a cumulative 25 basis point rate cut, whereas in April, there was only a 3.0% chance of a 50 basis point cut. This indicates that market participants generally believe the Fed will remain cautious in the near term, and rate cuts are more likely to be gradually implemented in the spring.

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