Fed Rate-Cut Odds Before 2027 Fall to 32.9% as Higher-for-Longer View Gains Ground
Summary
- Expectations for an early Fed rate cut in US financial markets have weakened, with the odds of a cut before 2027 falling to about 32.9%%.
- The 'higher for longer' outlook is gaining strength as oil prices surge, concerns over renewed inflation build, and rising US Treasury yields add pressure.
- Markets are watching how changes in the Fed's policy path could affect US stocks, cryptocurrencies, and volatility across global financial markets.
Forecast Trend Report by Period
Expectations for an early Federal Reserve rate cut are fading rapidly in US financial markets, reinforcing the view that borrowing costs will stay higher for longer.
As of May 21, traders on prediction market platform Kalshi were pricing the odds of a Fed rate cut before 2027 at about 32.9%.
That marks the lowest level in recent months.
At the start of this year, the probability was reportedly above 90%.
Markets have recently embraced a higher-for-longer outlook as oil prices jump, concerns grow over a renewed rise in inflation, and US Treasury yields climb.
Minutes from the Federal Open Market Committee released earlier showed that many Fed officials believe they should consider raising rates if inflation remains above the central bank's 2% target.
Investors are watching how any shift in the Fed's policy path could ripple through US stocks, cryptocurrencies and volatility across global financial markets.
