What happened
According to CME's FedWatch tool, the probability that the Federal Reserve will hold interest rates steady through September is 49.8%, while the chance of a cumulative 25-basis-point hike by September is 50.2%.
For October, the data shows a 35.5% probability of no rate change, a 50.1% probability of a cumulative 25-basis-point increase, and a 14.5% probability of a cumulative 50-basis-point increase.
Why it matters
The near-even split between holding rates and a quarter-point hike at September suggests the market sees the Fed's next move as a close call, hinging on incoming economic data and inflation signals.
October probabilities imply that traders view a 25bp move as the most likely outcome over the slightly longer horizon, with a smaller but notable chance of a larger cumulative tightening.
Key facts
September: 49.8% probability of unchanged rates, 50.2% probability of a cumulative 25bp hike.
October: 35.5% probability of unchanged rates, 50.1% probability of a cumulative 25bp hike, 14.5% probability of a cumulative 50bp hike.
What to watch next
Updates to CME FedWatch probabilities ahead of the September policy meeting, as shifting economic data could alter the balance between a hold and a hike.