US interest rate cuts could be this high

That the Fed will cut interest rates in September is considered a foregone conclusion by market experts. But how big could this move be?

The next meeting of the Federal Open Market Committee (FOMC) of the Federal Reserve (Fed) is scheduled for September 18, where there may be a interest rate cut could be disclosed.

According to data from the crypto betting platform Polymarket 78% of market participants expect the Fed to cut US policy rates by 0.25%. 20% even assume a cut of at least 0.5%. Only 3% expect interest rates to remain unchanged.

These bets were made with a total volume of $10.9 million.

Also, the FedWatch tool from the CME Group provides insight into market participants' prediction of possible interest rate changes. These predictions are based on the prices at which futures contracts are traded on the exchange.

According to this tool, the probability of a 0.25% cut in the so-called "Fed Funds Rate" in September is 61%. Just over a third of market participants are counting on a 0.5% decrease in interest rates.

Predictions of falling policy interest rates are mainly driven by lower inflation data and weakening economic data.

Cheaper money and the accompanying increase in liquidity in financial markets are seen by many experts as conducive to further rising stock and crypto markets.