FedWatch December Rate Cut Probability Jumps to ~70% on Dovish Fed Remarks (Nov 21,2025)

This analysis is based on a Reddit post [0] published on November21,2025, which noted the CME FedWatch Tool’s probability of a December 2025 Federal Reserve rate cut jumped from ~44% to ~70%.

The sharp shift in rate cut expectations to ~70% (71.3% per official reports [1]) was primarily driven by collective dovish remarks from multiple Federal Reserve officials on November21,2025[1]. These comments reversed a recent downward trend in rate-cut expectations (which had dropped below30% earlier) and reignited market speculation about an imminent cut[1].

Key contextual factors include:

1. The next Federal Open Market Committee (FOMC) meetings are scheduled for December10,2025 and January28,2026[1].
2. The November Consumer Price Index (CPI) data— a critical inflation indicator—will be released on December18,2025, after the December FOMC meeting[1]. This timing amplified the impact of the officials’ remarks, as markets adjusted expectations without access to pre-meeting inflation data.

Reuters [2] noted that the increase in rate-cut bets acted as a tailwind for Wall Street indexes, though markets posted mixed results for the day.

1. Fed Communication Impact
   : Collective dovish remarks from Fed officials can drive rapid, significant shifts in market rate expectations (as seen in the ~26 percentage point jump in FedWatch probability).
2. Data Timing Sensitivity
   : The absence of key inflation data before the December FOMC meeting allowed Fed communications to have an outsized influence on market sentiment.
3. Expectation Volatility
   : Rate-cut expectations remain fluid, with recent swings indicating high market sensitivity to Fed signals and economic data.

• Expectation Misalignment
  : If the Fed does not cut rates in December, markets may face disappointment, leading to potential volatility.
• Data-Driven Reversal
  : Post-meeting CPI data (Dec18) could contradict current expectations, triggering another shift in rate-cut probabilities.

• Rate-Sensitive Sectors
  : Sectors like technology, real estate, and consumer discretionary may benefit if rate cuts materialize, as lower borrowing costs support growth and valuation.

• FedWatch Tool’s December rate cut probability jumped to ~70% (71.3% per Weex) on Nov21,2025, up from ~44% earlier.
• Primary driver: Collective dovish remarks from multiple Fed officials.
• Key dates: December10 FOMC meeting; December18 CPI release.
• Market reaction: Mixed results for the day, with rate-cut bets acting as a tailwind but overall volatility persisting.