How the Federal Reserve's interest rates might evolve by June 2026

Market expectations for the Federal Reserve’s interest rates in the upcoming quarter have become increasingly nuanced. According to the latest data available from market analysis tools, traders are closely monitoring potential moves in U.S. monetary policy in the coming months.

March and April Scenarios: Probabilities According to FedWatch

CME’s FedWatch tool provides a detailed overview of rate expectations. Until March, the market assigns an 80.4% chance that the Federal Reserve will maintain a cautious stance, keeping current interest rate levels unchanged. Simultaneously, there is a 19.6% probability of a cumulative 25 basis point cut within the same month.

Looking at the outlook for April, the probability of a cumulative 25 basis point reduction increases significantly to 36%, while the chance of no change stands at 58.8%. A smaller segment of the market, at 5.3%, even anticipates a cumulative 50 basis point decrease by April, indicating a more aggressive stance on easing policy expectations.

June Outlook: When the Probability of a Cut Rises

Projecting into the second summer month, the interest rate forecast landscape changes considerably. The probability of a cumulative 25 basis point cut rises to 49.3%, surpassing the 50% threshold for the first time, suggesting growing market confidence in the possibility of actual rate cuts in the coming months.

These projections reflect evolving market dynamics and uncertainty regarding the timing and magnitude of the Federal Reserve’s interventions on the interest rate structure.