Fed Rate Cut Odds Lower After ADP Data
The release of the US ADP employment data for August has cooled expectations for a significant interest rate cut by the Federal Reserve in September. According to CME’s “Fed Watch” tool, the probability of a 50 basis point rate cut has dropped from 45% to 37%.
The ADP National Employment Report showed that private-sector jobs increased by 177,000 in August, exceeding market expectations. This stronger-than-expected labor market data suggests that the Federal Reserve may have more room to maintain its current monetary policy stance.
While the probability of a 50 basis point cut has decreased, the market still assigns a 63% chance to a 25 basis point rate cut in September. However, the overall outlook for monetary policy remains uncertain, and future economic indicators will continue to play a crucial role in shaping the Fed’s decisions.
