CME FedWatch: 95% Chance Fed Keeps Rates Unchanged in January; March Cuts Seen Unlikely
CME Group’s FedWatch tool shows markets priced a 95.0% probability that the Federal Reserve will keep interest rates unchanged at its January meeting and a 5.0% chance of a 25 basis-point cut. Compared with an earlier snapshot (81.7% stay / 18.3% cut), the later data indicates markets moved toward expecting no action in January. By March, market-implied odds shifted to 24.3% for a cumulative 25-bp cut, 1.1% for a cumulative 50-bp cut, and 74.6% that rates will remain unchanged through March. These probabilities were reported before the US Consumer Price Index (CPI) release. Traders use FedWatch probabilities to price interest-rate expectations into bond yields, the dollar and risk assets — including cryptocurrencies — so the reduced odds of near-term cuts generally support higher yields and a firmer dollar, which can pressure crypto risk appetite in the short term. This market-implied outlook is informational and not investment advice.
Neutral
The FedWatch readings point to a high probability of no rate change in January and a low chance of sizable cuts by March. For cryptocurrencies, the immediate effect of a reduced near-term cut probability is typically downward pressure: higher expected rates support bond yields and a stronger dollar, which can weigh on risk assets including crypto. However, because the market still prices a modest chance of a 25-bp cut by March (24.3%) and the data was published before CPI, uncertainty remains. That combination suggests limited directional conviction: in the short term, crypto may face headwinds if yields/dollar firm, but any weaker-than-expected CPI or renewed expectations for cuts could quickly reverse sentiment and boost risk assets. Over the medium term, persistent higher-for-longer rates would be modestly bearish for speculative assets, while clear signals of easing would be bullish. Given these offsetting forces, the overall impact is neutral.