Markets Expect Fed Rate Cut in October

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  Traders expect a Fed rate cut to 3.75–4.00%.
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  The market is pricing in a 98.3% probability.
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  The decision is expected at the October 29 Fed meeting.

The U.S. financial markets are showing near certainty that the Federal Reserve will cut interest rates at its next policy meeting on October 29. According to current futures data, there’s a 98.3% probability that the Fed will lower the benchmark rate to a range of 3.75%–4.00%, signaling a major shift in monetary policy expectations.

This strong market sentiment reflects growing confidence that the Fed will pivot towards easing, especially as inflation shows signs of cooling and economic growth begins to slow.

Why a Rate Cut Now?

The anticipated Fed rate cut in October stems from multiple economic indicators pointing to a slowdown. Recent data suggests that inflation is gradually declining, and job growth has started to ease. These trends give the Federal Reserve more room to reduce rates without risking a spike in prices.

By cutting rates, the Fed aims to support the broader economy, encourage borrowing, and maintain liquidity in the financial system. Lower rates typically reduce the cost of credit for consumers and businesses, stimulating investment and spending.

Market Reaction and Investor Outlook

With a 98.3% chance now priced in, investors are adjusting their strategies in anticipation of the cut. Bond yields are slipping, stock markets are reacting positively, and crypto markets could also see increased activity as lower interest rates tend to push investors toward riskier assets.

If the Fed follows through, this move could set the tone for the remainder of 2025, marking the beginning of a more dovish monetary stance after a long period of tightening.