The probability of the FRB holding rates steady in January has risen to 84.5%, and the 25-basis point rate cut scenario has receded.

According to data analysis provided by CME’s “FedWatch,” the probability that the U.S. Federal Reserve (FRB) will keep interest rates unchanged in the January decision is the majority expectation in the market. This outlook is based on concerns over residual inflation pressures and economic stability.

Market Expectation: Only 15.5% Chance of a 25-Basis-Point Rate Cut

The probability that the FRB will implement a 25 basis point (0.25%) rate cut in January remains at 15.5%, with an 84.5% chance of holding rates steady, creating a significant gap. In financial markets, there is a growing tendency to prioritize maintaining the current interest rate level over fine-tuning in basis point increments. This figure suggests that market participants support the FRB’s cautious approach.

Multiple Rate Cut Scenarios Coexist Throughout 2025

Looking at the longer-term outlook, the market shows a complex expectation structure through March 2025. The probability of a cumulative 25 basis point rate cut during this period is 42.2%, while the chance of continued rate stability is 51.8%, nearly evenly balanced. Additionally, the probability of a substantial 50 basis point rate cut is only 6.0%.

From these numbers, it can be inferred that the FRB is likely to adopt a gradual and phased approach, while maintaining flexibility to respond to sudden changes in economic conditions. Market participants continue to monitor movements in basis points closely and remain on alert for the next rate announcement.