Fed rate hike odds for October 28 dropped to 35% from 70% on softer U.S. inflation data, with prediction markets following suit.
Macro & Markets ·
Market participants have sharply reduced their expectations for a Federal Reserve rate increase on October 28, with odds falling to 35% from 70% according to CME FedWatch data. The shift followed softer-than-expected U.S. inflation readings released on the same day, prompting a reassessment of near-term monetary policy moves.
Prediction markets reflected the change in sentiment. Bets on Polymarket tracking a Fed rate increase declined alongside the CME odds movement, indicating consistency across different venues where traders price in policy expectations. The compression in rate hike probability suggests market confidence that inflation data may have eased pressure on the central bank to tighten further.
The magnitude of the swing—from 70% to 35%—underscores how sensitive rate expectations remain to incoming economic data. Whether this repricing persists or reverses will depend on incoming reports and Federal Reserve communications in the lead-up to the October 28 decision.