Probability of the Fed’s December Interest Rate Decision Rises to 93.5 Percent—Where Might Rates Be in January?

As the Fed’s December meeting approaches, the probability of a 25 basis point interest rate hike in the futures market has risen to 93.5%. This probability, which was 77.5% a week ago, has now climbed above 90% in the latest pricing. The market’s next question is whether the Fed will raise interest rates again in January.

Based on today’s rates calculated from CME futures, the probability of a 50 basis point increase on December 9th is 6.5%. The current interest rate range maintained by the Fed at its October meeting is 3.75–4.00%. A quarter-point increase would bring this range to 4.00–4.25%.

The Highest Probability for January is Between 4.25–4.50 Percent

With the same pricing, there is a 68.8% probability that the interest rate will be in the 4.25-4.50% range after the January 27 meeting. The probability of it being in the 4.00-4.25% range is 26.6%, and the probability of it being in the 4.50-4.75% range is 4.6%. These rates show the expected interest rate range at the end of the January meeting. If a quarter-point increase occurs in December, the range given the highest probability for January will require another quarter-point increase.

Bank of America also added a 25 basis point increase to its January interest rate forecast today. According to a summary of a research note published on X, the bank’s new forecast is for increases at the December, January, and March meetings.

The decision will be announced at 22:00 Turkish time.

According to the Fed’s official calendar, the last interest rate meeting of the year will be held on December 8-9. The decision will be announced on December 9 at 10:00 PM Turkish time, and Fed Chairman Kevin Warsh’s press conference will begin at 10:30 PM.