The Federal Reserve is set to make a significant decision in just a few hours, and there is a notable level of uncertainty surrounding the outcome. The big question on everyone's mind is how much the Fed will cut rates, marking the first time since the onset of the Covid-19 pandemic.
Recent market trends suggest a growing preference for a substantial rate cut, with a 65% probability priced into the futures market for a half-point reduction. However, there is still a 35% chance that the Fed may opt for a more traditional quarter-point cut.
The possibility of a larger rate cut raises speculation about the underlying concerns of Fed officials regarding the state of the economy. Such a move could signal a more cautious approach in light of potential economic challenges.
