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Understanding the CME Group FedWatch

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The CME Group FedWatch tool lets you quickly gauge the market’s expectations of potential changes to the Fed Funds target rate. The CME Group FedWatch is based on 30-Day Fed Funds futures prices, which have long been used to express the market’s views on the likelihood of changes in U.S. monetary policy.
  • FOMC meetings are matched with the corresponding 30-Day Fed Funds Futures contract.
  • Probabilities of possible Fed Funds Target Rates are calculated based on the post-meeting Fed Fund Futures contract price.
  • Probability of Rate Hike is calculated by adding the probabilities of all target rate levels of 0.50 or higher.
  • The FedWatch tool is based on the assumption that the Federal Reserve Bank will target a single number and not a range for the federal funds target rate. Therefore, while the fed is targeting a range, one should use implied probabilities as a reasonable guide.
Fed Funds Futures Probability Tree Calculator
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