Federal Reserve Interest Rate Scenario in 2026: What the Market Foresees

GasFeeLover · 2026-02-22T10:04:58+00:00

The market cautiously assesses the moves of the Federal Reserve, with low probabilities of interest rate cuts. Forecasts suggest several possibilities for reductions by the end of the year, with a 50 basis point scenario being the most likely.

GasFeeLover

2026-02-22 10:04:58

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According to the latest CME FedWatch Tool data, the market is extremely cautious about the Federal Reserve’s moves for the rest of the year. Based on calculations by BlockBeats, an interesting picture emerges: the probability that the Federal Reserve will not cut interest rates at all by December 31, 2026, remains at 5.4%, a scenario now considered virtually unrealistic by analysts.

Probability Distribution of Rate Cuts

Forecasts highlight a range of four main scenarios. An overall reduction of 25 basis points has a 21.1% chance, while a slightly more expansive scenario of 50 basis points reaches 32.5%—making it the most likely scenario. A more aggressive decrease of 75 basis points stands at 25.9%, followed by an 11.7% chance of a 100 basis point cut. Finally, a drastic reduction of 125 basis points accounts for only 3% of the calculated probabilities.

March Meeting: First Test of the Season

Regarding the upcoming Federal Reserve meeting in March, traders assign a 23.2% probability to an initial 25 basis point cut at that time. This data suggests initial caution, with the central bank intending to proceed gradually with monetary policy normalization before any more decisive moves in the following months.

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