Wall Street no longer expects the U.S. Federal Reserve to lower interest rates in December of this year.
Futures markets are now placing the probability of a December rate cut at 49%. A month ago, the market was placing the odds of an interest rate cut before Christmas at 95%.
The shift in outlook comes after hawkish comments from Federal Reserve Chair Jerome Powell, who has said that a December interest rate reduction is far from certain.
Other officials with the U.S. central bank have made similar comments in recent weeks, creating apprehension over whether the central bank will deliver a third consecutive rate cut at the conclusion of its policy meeting on Dec. 10.
At the same time, a lack of economic data out of Washington, D.C. has made forecasting difficult and added to the uncertainty surrounding monetary policy.
Reduced expectations for another interest rate cut before year’s end has led to a sharp selloff of stocks on Wall Street.
On Nov. 13, the Dow Jones Industrial Average lost nearly 800 points while the technology-laden Nasdaq index declined more than 500 points.
U.S. markets are down again in premarket trading on Nov. 14, as are international indices.
However, traders on Wall Street are anticipating that the Federal Reserve may soften its stance come January.
Futures markets are now pricing in a 70% chance of an interest rate reduction early in the New Year should the central bank skip a rate cut in December.
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