CME FedWatch puts the probability of a 25-basis-point Federal Reserve rate increase in December at 90.8%, with a 9.2% chance of a 50-basis-point hike. Together, those outcomes imply a 100% chance of an increase.
Why it matters
The pricing points to expectations of tighter monetary policy. Higher interest rates raise borrowing costs and can weigh on valuations of risk assets, including cryptocurrencies and technology stocks.
Market impact
The split between the two outcomes matters for investors assessing how far rates could rise. FedWatch reflects market-implied probabilities, not a guarantee of the Fed's decision.
Frequently asked questions
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What size December rate hike has the highest probability?
CME FedWatch puts the probability of a 25-basis-point hike at 90.8%, compared with 9.2% for a 50-basis-point increase.
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How do the FedWatch probabilities add up to 100%?
The 90.8% probability of a 25-basis-point hike and the 9.2% probability of a 50-basis-point hike together total 100%.
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Does FedWatch guarantee a December rate increase?
No. FedWatch reflects market-implied probabilities, not a guarantee of the Federal Reserve's decision.
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Why do higher Fed rates matter for crypto and technology stocks?
Higher interest rates raise borrowing costs and can weigh on valuations of risk assets, including cryptocurrencies and technology stocks.
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What does the split between 25 and 50 basis points tell investors?
It shows that a 25-basis-point increase dominates market pricing, while a 50-basis-point move has a smaller implied probability.
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