CME FedWatch, a tool that measures market expectations for changes in the US Federal Reserve's interest rate, has just adjusted its forecast for the probability of a rate cut in December to 76.2%, a significant increase compared to previous estimates.
On December 3, the instrument recorded an increase of 10.2 percentage points compared to 66% on November 29. Accordingly, the market forecasts that the Fed will announce a 0.25% interest rate cut, bringing the target interest rate range to 4.25%-4.5% at the meeting taking place on December 17-18.
Currently, the Fed's interest rate is maintained in the range of 4.5% - 4.75%, after two adjustments down a total of 0.75% this year, from the highest level in more than two decades.
Interest Rate Cut: A Positive Signal for Bitcoin
Fed rate cuts are typically positive for Bitcoin, as lower borrowing costs often prompt investors to move into riskier assets, including cryptocurrencies.
CME FedWatch tracks the probability of interest rate changes through 30-day futures data on the Fed rate.
Expectations for a rate cut increased after Fed Governor Christopher Waller spoke at a monetary policy conference in Washington, D.C., on Dec. 2. “Right now, I’m leaning toward a cut,” Waller said, but noted that the final decision would depend on new data on jobs, consumer spending and inflation released ahead of the meeting.
These data will play an important role in deciding whether the Fed should cut interest rates or keep them unchanged, Mr. Waller added.
Meanwhile, New York Federal Reserve Bank President John Williams, speaking at an event in New York, said he expected interest rates to fall “over time,” but did not confirm whether he would support a cut at the next meeting.
Fed Chairman Jerome Powell previously said that there is “no immediate need to cut rates.” He is expected to offer a new perspective on the issue at a public event in New York on December 4.
Bitcoin and the year-end outlook
Alongside the interest rate forecasts, Bitcoin continues to attract attention as its price has more than doubled year-to-date, fueled by bullish sentiment in the US market. This is partly due to the victory of Donald Trump, who pledged to reform crypto regulations.
Bitcoin is currently trading around $96,000, up about 0.3% over the past 24 hours. However, many analysts expect Bitcoin to hit the $100,000 mark before the end of 2024.