Chance of Fed rate cut in December rises to 85%

The American Federal Reserve could well begin a decisive turning point. According to the latest data from the CME FedWatch Tool, markets are now pricing in an 85% chance of a rate cut as early as December. A rapid development, which contrasts with the firmness displayed in recent months. If this scenario is confirmed, it will mark the end of an unprecedented cycle of monetary tightening and could upset the balance of financial markets.

The Fed moves towards monetary easing

The market seems to be anticipating a significant change in monetary direction. According to data from the CME FedWatch Tool, the chances of a rate cut from the FOMC meeting on December 9 and 10 jumped to 85%, while they were still largely in the minority the previous week.

This rapid reversal is fueled by a series of public statements from the Federal Reserve:

• Christopher Waller, Governor of the Fed, declared
  : “If inflation continues to fall over the coming months, it is entirely possible that the Fed will start lowering rates in a few months”;

• San Francisco Fed President Mary Daly noted that “the moderation of employment could justify a relaxation of monetary policy”;

• Recent labor market indicators reveal a slowdown in job creation and a stabilization of wage growth;

• This development, combined with controlled inflation, reinforced the markets' conviction of imminent monetary easing.

This change of tone is all the more surprising as it contrasts sharply with the caution displayed in recent months by the Fed, which remained focused on the objective of price stability. From now on, the signals sent reveal a shift in monetary policy, with the aim of avoiding too marked a weakening of the economy.

Cryptos react positively to anticipated easing

While the debate rages within the Fed, the crypto market seems to have already decided. Bitcoin, the largest capitalization in the sector, recorded an intraday peak at $88,162, and is now approaching the symbolic mark of $90,000.

For its part, Ethereum has progressed by more than 1% over the last 24 hours, with the clear objective of regaining $3,000. This dynamic is not limited exclusively to the two leading assets. Other major cryptos such as XRP, ADA, SOL and BNB are also showing an upward trend.

The entire market is benefiting from this wave of optimism, so much so that the global capitalization of assets has exceeded $3,000 billion.

Indeed, investors seem to be integrating into their strategies the hypothesis of a return to more favorable liquidity conditions. This phenomenon is accentuated by other macroeconomic factors, such as the recent announcement that Ukraine has accepted the conditions of a peace plan proposed by Donald Trump to end the conflict with Russia, news which reinforces the feeling of geopolitical stabilization, and therefore the propensity for risk on the markets.

The Fed now faces a decisive choice for December. Between signals of economic slowdown and contained inflation, the option of monetary easing is gaining ground. The markets, crypto in the lead, scrutinize every statement. One misstep, and the momentum could break. A rate cut would reshape the current balance, but the final decision remains pending at the next FOMC meeting.