US interest rate cut in December reaches 74.5% probability

The CME FedWatch tool indicates a 74.5% probability that the Federal Reserve will cut interest rates by 25 basis points this December. 

This marks an increase from a previous estimate of 66% on November 29.

If enacted, this would represent the third rate cut of the year, reducing the target range to 4.25% to 4.5%.

Currently, the Federal Reserve's rates are set between 4.5% and 4.75%, following two cuts earlier this year that brought rates down from a two-decade high.

The market's optimism for a rate cut was bolstered by comments from Federal Reserve Governor Christopher Waller, who expressed support for a cut during a monetary policy conference on December 2.

“The decision will depend on whether data that we will receive before then surprises to the upside and alters my forecast for the path of inflation,” Waller noted.

He emphasised that upcoming data on employment, consumer spending, and inflation would influence his decision.

Similarly, New York Fed President John Williams stated he anticipates interest rates will decrease “over time,” although he did not specify his stance on the upcoming meeting.

Federal Reserve Chair Jerome Powell indicated last month that there were no immediate signals necessitating a rate cut but is expected to address this topic again in a public discussion on December 4.

In addition to these developments, Bitcoin's (CRYPTO:BTC) price has more than doubled this year amid increasing market optimism in the U.S., significantly influenced by Donald Trump's election and his proposed changes to crypto regulations.