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Data from the cryptocurrency prediction platform Polymarket showed that the market overwhelmingly priced in the expectation that the Fed will keep interest rates unchanged at its June meeting.
This meeting is of critical importance as it will be the first meeting after Jerome Powell’s term as Fed chairman ends, and investors are closely watching how the policy direction will be shaped under the leadership of the new Fed Chairman, Kevin Warsh.
According to Polymarket data, the probability of no change in interest rates at the June 17 meeting is 98 percent. In contrast, the probability of a 25 basis point rate cut is priced at 1 percent, while the probability of a 50 basis point or greater cut is below 1 percent. Markets also view rate hike scenarios with a very low probability. The probability of a 25 basis point rate increase remains below 1 percent, while the probability of a 50 basis point or greater increase is also below 1 percent.
Jerome Powell, who managed many critical periods during his term, including the pandemic, a period of high inflation, and banking crises, completed his eight-year term as FED chairman on Friday. Despite the end of his term, Powell announced that he will retain his seat on the FED Board of Governors and will continue in his role until the investigation into the renovation of the central bank’s headquarters in Washington is concluded. This could allow Powell to continue influencing interest rate policies until 2028.
*This is not investment advice.