Forecasts Now Vary Widely as the Odds Shift for the Fed’s December Interest Rate Decision – Here Are the Latest Data
Global markets are focused on the Federal Reserve's upcoming December meeting, with mixed expectations about interest rate changes. CME Group data suggests less than a 50% probability of a 25 basis point rate cut, while Kalshi platform gives it a 50% probability. Predictions show 50% probability for a 25 basis point cut, 47% for no change, and 4% for a cut beyond 25 basis points. The Fed's decision is critical as slowing inflation, a weakening labor market, and tightening financial conditions add complexity. Simultaneously, the ongoing US government shutdown is having notable economic impacts, with an analysis from Anderson Economic Group suggesting the 2025 shutdown could have more severe consequences than the 2018-2019 shutdown. Official data on this impact is expected later. Disclaimer: This is not investment advice.
Focus on the Fed's December Meeting
All eyes in global markets are once again on the Fed's December meeting. This time around, however, expectations are quite mixed. According to CME Group data, investors now see the probability of a 25 basis point rate cut in December as less than 50%. On the other hand, investors on the Kalshi platform still estimate the same scenario at a 50% probability.
Diverging Predictions on Interest Rate Decisions
According to Kalshi's latest predictions, the probabilities for December's Fed decision are as follows:
- 25 basis point interest rate cut: 50%
- Leaving the interest rate constant: 47%
- Discount over 25 basis points: 4%
The chart highlights a significant divide among market participants regarding the Fed's December meeting. Despite slowing inflation, factors like the weakening labor market and tightening financial conditions make the Fed's decision even more critical.
Impact of the US Government Shutdown
Meanwhile, the economic impacts of the ongoing and historically long government shutdown in the US are becoming increasingly apparent. A brief analysis published by Anderson Economic Group LLC on November 14th found that the 2025 shutdown could have even more severe consequences than the previous record-breaking shutdown of 2018-2019.
Insights from Anderson Economic Group
Patrick Anderson, the CEO of Anderson Economic Group LLC, stated: “The current information we have from the private sector suggests that the economic impact of the 2025 shutdown will be more severe than the 2019 shutdown.” He reminded that official data will not be available for at least a month.
This is not investment advice.