Markets expect single Fed rate cut in 2025

Investor expectations for US interest rate cuts have shifted to just one this year instead of two, amid rising uncertainty over the economic impact of President Donald Trump’s trade and immigration policies.

On Feb. 12, the federal funds futures market indicated a 40.1% probability that the Federal Reserve will cut its benchmark interest rate by 25 basis points at its December 2025 meeting, up from 37% the previous day and 28.5% a week earlier.

According to the FedWatch tool, expectations for maintaining interest rates at the September 2025 meeting rose to 41.9% from 29.9% the previous day, as markets abandoned projections for a rate cut at that meeting.

This shift follows data from the Bureau of Labor Statistics, which showed that the US Consumer Price Index (CPI) climbed 0.5% last month after rising 0.4% in December, defying expectations of a slowdown to 0.3%.

Federal Reserve policymakers are scheduled to meet in March, with a 97.5% probability of holding interest rates steady.