Market confidence in a December Federal Reserve rate cut has weakened sharply, with the probability sliding to roughly 52% as investors struggle to gauge the central bank’s next move amid mixed economic signals.
Fresh data from CME’s FedWatch tool shows traders now split almost evenly on whether the Fed will deliver a 25 basis point reduction at its Dec. 10 meeting. The shift marks a significant deterioration from expectations just weeks ago: markets were pricing a near-certain 95% chance of a cut one month earlier, and odds were still sitting at 65% as recently as last week. A quarter-point move would lower the federal funds target range to between 3.5% and 3.75%, marking a potential pivot after months of cautious policymaking.
The fading likelihood of near-term easing reflects several crosscurrents. Recent economic data—including uneven labor indicators, stubborn services inflation, and resilient consumer spending—has left markets unsure about how aggressively the Fed will move to support growth. Comments from policymakers have also been mixed, with some officials pointing to progress on inflation while others stress the need for more evidence before cutting rates.
This uncertainty is filtering directly into risk assets. Cryptocurrencies, which tend to react strongly to shifts in monetary expectations, remain sensitive to the evolving macro backdrop. Bitcoin was trading near $103,000 at the time of writing, showing little change on the day despite broader volatility across financial markets, according to CoinDesk data. Analysts note that the softening odds of a December cut may cap upside momentum in BTC and other digital assets in the short term, particularly with liquidity thinning into year-end.
Until clearer signals emerge from economic data or Fed communications, traders are likely to remain cautious, with rate-cut expectations continuing to drive sentiment across both traditional and crypto markets.
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