99.9% Odds Say Fed Will Hold Rates Steady at June FOMC Meeting

Investor expectations for a U.S. Federal Reserve rate cut at the June 18 FOMC meeting have all but disappeared...

Written by: Arslan Butt • Tuesday, June 10, 2025 • 2 min read

• Last updated: Tuesday, June 10, 2025

Quick overview

Investor expectations for a U.S. Federal Reserve rate cut have plummeted, with a 99.9% probability now favoring a hold at 425–450 bps.
Stronger-than-expected labor data has reinforced the Fed's cautious stance on monetary policy, with inflation still above the 2% target.
Political pressure for a rate cut is increasing, with figures like Donald Trump advocating for significant reductions and suggesting potential changes in Fed leadership.
Market sentiment remains cautious as traders await the upcoming Consumer Price Index report for further direction.

Investor expectations for a U.S. Federal Reserve rate cut at the June 18 FOMC meeting have all but disappeared. According to the CME FedWatch Tool, the probability of a rate cut to 400–425 bps has collapsed to 0.1%, with 99.9% now expecting a hold at 425–450 bps.

This is after stronger than expected U.S. labor data came out and reinforced the Fed’s case for staying the course. In early May the same rate cut had a 9% probability, but confidence in the economy has flipped the market.

Prediction markets are in line with this. Polymarket, a blockchain based forecasting platform, has aligned with CME data and shows almost no confidence in a near term rate cut. This is consensus across both institutional and retail trading platforms.

Inflation and Jobs Data Matters

The Fed’s decision is based on two key metrics: inflation and employment. U.S. labor reports are still showing solid job growth, strong demand and a stable economy. Inflation is above the Fed’s 2% target and that’s keeping policymakers cautious.

FOMC meeting minutes highlighted concern over persistent inflation and external macroeconomic risks including new trade tariffs. Fed Chair Jerome Powell is taking a wait and see approach and is not feeling the urge to move policy prematurely.

Markets are now looking to the upcoming Consumer Price Index (CPI) report for direction. A surprise dip in inflation could revive rate cut hopes but until then the mood is cautious.

Key Drivers Behind Fed’s Stance:

Strong labor market
Inflation above 2% target
Global risks and uncertainty

Calls for Rate Cuts Grow Louder

Despite the slim odds, political pressure for a rate cut is intensifying. Following the European Central Bank’s 25 bps cut, voices across the U.S. political and economic spectrum are urging the Fed to follow suit.

Donald Trump, the former president and 2024 candidate, has publicly backed a 100 bps cut, calling it “rocket fuel” for the economy. Trump also criticized Jerome Powell’s leadership, calling him a “disaster,” and hinted at replacing him with Kevin Warsh, a former Fed Governor.

Though the central bank remains independent, rising public and political pressure could influence longer-term expectations.

Recent Developments:

ECB cuts rates by 25 bps, raising questions on Fed’s delay
Trump calls for 100 bps cut and hints at new Fed Chair
Kevin Warsh emerges as potential Powell replacement

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ABOUT THE AUTHOR See More

Arslan Butt

Lead Markets Analyst – Multi-Asset (FX, Commodities, Crypto)

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.