Markets price an 84.5% chance the Fed holds rates in October
The only alternative carried in the October 18 pricing was a 25-basis-point increase at 15.5%, with no cut reflected in the figures.
By The Carnegie Standard Staff
· 1 min read
As of October 18, market pricing put the probability of the Federal Reserve leaving interest rates unchanged at its October decision at 84.5%, with a 15.5% probability attached to a 25-basis-point increase, according to TokenPost.
Two things deserve emphasis, and both are easy to lose in the shorthand of a percentage. The first is what the number is not. TokenPost was explicit that these are market-implied probabilities for the October outcome, not a Federal Reserve decision or announcement. Nothing has been decided, and a figure carried to one decimal place can lend an air of precision to what remains an open question.
The second is the shape of the distribution rather than its headline figure. The two outcomes carried in the pricing — no change and a quarter-point increase — account for the entire 100%. A rate cut is not represented at all. For readers who track the direction of policy rather than its exact timing, that asymmetry is the more useful piece of information: the only move priced for October was upward, and it was priced as the unlikely case.
An 84.5% reading is best read as a description of market positioning on a single day, not as a forecast with authority behind it.
This story was first reported by TOKENPOST.
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