Traders See Fed Starting With 25 bps Cut This Month

Traders priced in a quarter-point Federal Reserve interest rate cut this month, with a bigger move expected at its next meeting, after Fed Governor Christopher Waller said recent labor market data show it is time to cut rates and said he could support a bigger rate cut if the data warrant it, Ann Saphir reported for Reuters.

The Marriner S. Eccles Federal Reserve building in Washington D.C.

Traders see a 70% chance of a quarter-point move this month based on rate-futures prices and are pricing in a Fed policy rate range of 4.5%-4.75% by the Fed's November meeting.

The policy rate has been in the 5.25%-5.50% range for more than a year.

The stock market has been gearing for a rate cut this month after the Fed said signs that inflation is easing and the job market is cooling would influence any decision to make a significant interest rate cut this month, with more cuts likely later this year.