Fed Rate Cut Likely in December, Says FedWatch

According to the latest data from the CME FedWatch Tool, there’s now an 89.2% probability that the U.S. Federal Reserve will cut interest rates during its December 2025 meeting. This marks a significant shift in market expectations, signaling increased confidence that the Fed is preparing to ease monetary policy after a long stretch of high interest rates aimed at controlling inflation.

This change in sentiment comes amid signs that inflation is cooling and economic growth is stabilizing. Traders and analysts are closely watching the Fed’s tone in public speeches and economic projections, with many interpreting recent comments as dovish—or supportive of rate cuts in the near future.

What This Means for Markets

A rate cut could have broad implications across financial markets. For traditional investors, lower interest rates typically lead to cheaper borrowing costs and can boost spending and investment. For the crypto market, historically, rate cuts have been bullish, as investors often seek alternative assets like Bitcoin and Ethereum when returns from traditional financial products weaken.

In addition, businesses and consumers could benefit from more favorable loan terms, potentially lifting economic activity heading into 2026. However, the Fed will likely tread carefully, ensuring inflation remains under control before making any major moves.

Why the Fed Might Act Soon

Several factors are aligning in favor of a rate cut:

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  Cooling Inflation: Consumer prices have begun to stabilize, reducing the urgency of tight monetary policy.
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  Slower Job Growth: While the labor market remains strong, recent data shows hiring is moderating, a potential sign of a slowing economy.
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  Global Trends: Other central banks are also signaling or implementing rate cuts, adding pressure on the Fed to act.

Still, the final decision will hinge on upcoming economic data releases and broader global trends. Markets will be watching every word from the Fed until the December meeting.