Markets Bet on 100% Chance Of Fed Rate Cuts In September

Investors are confident that the Federal Reserve will be lowering interest rates by the end of its September meeting.

The increased confidence follows a better-than-expected June inflation reading combined with signs of further cooling in the labor market.

As of Tuesday morning, markets were pricing in a 100% chance of an interest rate cut in September, up from a 70% chance a month ago, according to the CME FedWatch Tool, Josh Schafer reported for Yahoo Finance.

The increased confidence follows a better-than-expected June inflation reading combined with signs of further cooling in the labor market.

Economists and investors alike believe this data suggests the Fed will soon begin cutting interest rates as inflation falls closer to the Fed's 2% target.

"Recent data have showed a continued softening in the labor market and substantial cooling in inflation pressures, importantly in the all-important shelter category," Deutsche Bank chief US economist Matthew Luzzetti wrote in a July 12 research note.

The aforementioned included a projection for a September rate cut. Fed Chairman Jerome Powell also stated that recent data have added "somewhat" to the central bank's confidence that inflation is falling to its target.