Expectations for an emergency rate cut by the Federal Reserve have risen, with the probability of a 25 basis point rate cut next week reaching 40%.

Odaily Planet Daily News As the US government's tariff policy has raised concerns about a global recession, traders have raised their expectations for the Federal Reserve to cut interest rates this year, and some even believe that the Fed will cut interest rates before the next meeting. The overnight interest rate swap market shows that the market expects the Federal Reserve to cut interest rates by 125 basis points by the end of this year, equivalent to five 25 basis point cuts. Although this expectation has subsequently fallen back, the increase is very significant. Compared with last week, the market has only fully digested the expectation of three rate cuts. Swap contracts also show that the probability of the Federal Reserve cutting interest rates by 25 basis points next week is about 40%, which is well before the Fed's next scheduled policy meeting on May 7. Emergency rate cuts are very rare. The last emergency rate cut by the Federal Reserve was when the outbreak of the new crown epidemic disrupted the market in early 2020. In August last year, when US stocks fell sharply due to the unwinding of yen carry trades, traders also briefly expected the Federal Reserve to cut interest rates between meetings, but policymakers did not act. (Jinshi)