Fed's next rate cut will be smaller, traders bet
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A screen on the trading floor at The New York Stock Exchange (NYSE) display a news conference with Federal Reserve Chair Jerome Powell following the Federal Reserve rate announcement, in New York City, U.S., September 18, 2024. REUTERS/Andrew Kelly
(Reuters) - Traders on Thursday added to bets the U.S. Federal Reserve's next rate cut will be smaller than the one it delivered on Wednesday, after economic data showed an unexpected drop in unemployment insurance claims.
Interest-rate futures contracts now price in about a 30% chance that the Fed, which cut rates by half a percentage point on Wednesday, will deliver a second cut of the same size in November. The market-based probability of a quarter-point rate cut in November is now about 70%, up from around 65% before the data.
(Reporting by Ann Saphir; Editing by Tomasz Janowski)
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