95.6% probability remains unchanged, the Federal Reserve's rate cut window is forced to be postponed until spring

According to the latest news, the probability of the Federal Reserve maintaining interest rates in January has reached 95.6%, with only a 4.4% chance of a rate cut. This data indicates that market expectations for the Fed’s January policy have become highly consensus—pausing rate cuts has become a certainty. This stands in stark contrast to a few weeks ago when the market was still discussing the possibility of a rate cut.

Improved Employment Data Breaks Rate Cut Expectations

The latest US employment report is the main driver of this shift. The unemployment rate dropped from 4.5% last month to 4.4%. Although new job creation was below expectations, the overall message from this data is clear—US economic resilience remains.

Fed Chair Powell’s assessment was quite straightforward: moderate job growth, a persistently sluggish hiring environment, but the unemployment rate has decreased. What does this seemingly contradictory phenomenon actually indicate? It suggests that labor supply is decreasing, and there are no signs of recession in the economy. For this reason, the Fed has no reason to rush into rate cuts to stimulate growth.

Market Expectation Shift

This shift is clearly reflected in the data. Citigroup recently adjusted its outlook for rate cuts by the Fed throughout the year:

In simple terms, the Fed’s rate cut window has been pushed from January to March, and the total number of rate cuts for the year has been adjusted from the original plan. As of March, the probability of a cumulative 25 basis point rate cut is only 27.6%, indicating that the market’s expectation for rate cuts in the short term is extremely conservative.

Trump’s Pressure and Reality

Interestingly, Trump recently demanded Fannie Mae and Freddie Mac purchase $200 billion in mortgage bonds, effectively pressuring the Fed to keep interest rates low. However, market reactions suggest that this pressure has limited influence on the Fed’s policy decisions. Economic data remains the hard truth.

Concerns in the Crypto Market

What does this shift mean for crypto assets? It implies that the Fed will keep interest rates high for a longer period. Although the market has been expecting rate cuts to release liquidity, it now appears that this cycle will be delayed. This could put pressure on the performance of risk assets.

From a certain perspective, this also explains why Bitcoin has recently oscillated between 89.3k and 94.4k—the market is digesting this new policy expectation.

Summary

The Fed maintaining interest rates in January has essentially become a certainty, with a 95.6% probability reflecting the market’s consensus. The improvement in employment data has shattered previous expectations of rate cuts, giving the Fed more patience to observe economic trends. The rate cut window has been pushed from January to March, which is a bearish signal for assets hoping for liquidity release. The key moving forward will be the economic data in February and March—if the economy continues to show resilience, the Fed may delay rate cuts even further.