Market pricing shows declining probability of Fed rate hikes before mid-2027

According to the CME FedWatch Tool, the odds of the Fed implementing more than one rate hike before mid-2027 have dropped meaningfully, suggesting traders are pricing in a longer stretch of monetary policy stasis than previously expected.

What the numbers actually say

The CME 30-Day Federal Funds futures show reduced odds of multiple 25 basis point hikes before mid-2027. On prediction platform Kalshi, traders are pricing in roughly 62% odds that at least one rate hike will occur before July 2027. The probability of multiple hikes has fallen considerably.

The probability of a hike at the September 2026 meeting is hovering between 30% and 40%, depending on which data release you’re looking at.

Goldman Sachs has weighed in with a forecast suggesting the Fed won’t begin cutting rates until June and December 2027. J.P. Morgan, meanwhile, has projected that the Fed’s next rate hike could come in Q3 2027.

Why the Fed is stuck in neutral

Inflation hasn’t fully cooled to the Fed’s target, but recent data has shown some easing in key metrics. Geopolitical tensions, including renewed conflict in the Middle East, add another layer of uncertainty. The Fed’s own communications suggest a reluctance to make near-term policy changes.

What this means for markets

For crypto markets, a stable rate environment removes one of the key macro headwinds that has periodically weighed on digital assets. Bitcoin and other risk-on assets have historically struggled during aggressive tightening cycles and rallied when monetary policy loosens or holds steady.

Goldman Sachs doesn’t see cuts arriving until the second half of 2027, which means the current rate level could persist for another year or more.

The key variable to monitor is inflation data. The 30-40% probability range for a September 2026 hike shows that markets aren’t fully ruling out Fed action. A hot inflation print could rapidly reprice expectations and push hike probabilities back up.

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