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Fed Rate Cut Odds Soar To 85% In A Week
Data from the CME FedWatch Tool indicates that the chances for a Fed rate cut in December have surged to over 85%, spiking considerably over the last week. A week ago, the odds were below 33% amid concerns about inflationary pressures, but dovish comments by Fed Governors have shifted the odds.
According to the CME FedWatch Tool, investors are eyeing a cut to the 350-375 bps from its current rate of 375-400. Fed Governor Christopher Waller disclosed in an interview that he will advocate for an interest rate cut at the FOMC meeting slated for December 9-10, sparking optimism for investors.
“Inflation isn’t a big problem going forward. It’s going to start pulling back,” said Waller. “I’m advocating for a rate cut at the next meeting.”
Mary Daly, President and CEO of the Federal Reserve Bank of San Francisco, has also declared support for a rate cut in December. Daly cited the softening of the labor market as a key reason for her decision to back a December rate cut, with unemployment steady at 4.1%.
 
Meanwhile, Barclays reported that Fed Chair Jerome Powell is leaning toward a December interest rate cut despite concerns of an internal split among the Fed Governors. Amid the upswing in odds of interest rate cuts, several economists are urging the Fed to hike rates, citing lingering inflationary pressures.
“The Fed should hike rates 50 basis points in December,” said US-based economist Charlie Bilello. “Inflation has been running at over 2x their target level (2%) for 5+ years now. The stock market and home prices are at record highs. Stop pursuing policies that will only create more inflation and worsen affordability.”
Despite Bilello’s bold call, the probability of the Fed keeping rates steady is under 15%.
BTC And ETH Show Glimpses Of A Recovery
CoinMarketCap data suggest that traders may have begun pricing in the anticipated December rate cut. Bitcoin price is inching toward the $90,000 mark after reaching an intraday peak of $88,162, with several experts tipping the cuts as a potential trigger for a meteoric rally to close the year.
Meanwhile, Ethereum has gained over 1% over the last 24 hours, signaling an intent to reclaim $3,000. At press time, XRP, ADA, SOL, and BNB have flipped green on the 24-hour charts, as the global cryptocurrency market capitalization surges past $3 trillion.
Previous back-to-back rate cuts have triggered major rallies in Bitcoin and Ethereum, with investors bracing for a similar effect if a rate cut occurs at the December FOMC meeting. From a macroeconomic perspective, reports that Ukraine has accepted the full terms of President Donald Trump’s peace plan to end the armed conflict with Russia have positively impacted cryptocurrency prices.