Fed Rate Cut Odds Surge to 71% For September

The odds of a U.S. Federal Reserve – Fed interest rate cut at the upcoming September 17, 2025, FOMC meeting have jumped to 71.4%. It is according to CME’s Fed Watch Tool. This sharp increase in expectations suggests that traders are now largely betting on a monetary policy shift in the coming months.

Key takeaways

• Fed Watch Tool shows 71.4% probability of a rate cut at the September 17, 2025, FOMC meeting.
• Markets now assign 0% chance to a rate hike, with consensus shifting toward a cut or no change.
• Majority expect a 25–50 bps cut from the current 425–450 bps range.
• Data signals increased optimism for policy easing amid economic uncertainty.
• Final outcome will depend on inflation, labor data, and future Fed guidance.

As per the data, there is a 61.8% chance that rates will be adjusted down to the 400–425 basis points (bps) range. Meanwhile, a 28.6% probability remains for maintaining the current 425–450 bps level. In a notable shift, the tool assigns a 0% probability to any further rate hikes. It is reflecting consensus that the Fed is likely done tightening for now.

The mid-price of the ZQUS September 2025 futures contract was recorded at 95.775, aligning with the view that interest rates are headed lower. Although a full 50 bps cut seems unlikely, a 25 bps reduction now appears to be the market’s base case scenario.

Policy direction hinges on upcoming economic data

This shift in sentiment has likely been influenced by early signals of slowing inflation and softer labor market conditions. It is worth noting also that the Fed Watch Tool itself does not cite specific catalysts. The rise in cut odds marks a substantial move from earlier in the quarter, when traders were more cautious.

Only a 9.6% chance is assigned to rates falling to the 375–400 bps level, signaling that while policy easing is anticipated, markets remain cautious about a more aggressive stance. Meanwhile, a “no change” outcome still carries a 26.8% likelihood.

Investors will look to upcoming inflation reports and Fed commentary for confirmation. Until then, the Fed Watch Tool will serve as a key gauge of evolving market expectations ahead of the pivotal September meeting.