Strong turnaround in interest rates expectations following Trump’s tariffs pause

Rate cuts by year-end

• Fed: 83 bps (79% probability of no change at the upcoming meeting)
• ECB: 70 bps (94% probability of rate cut at the upcoming meeting)
• BoE: 71 bps (78% probability of rate cut at the upcoming meeting)
• BoC: 76 bps (66% probability of rate cut at the upcoming meeting)
• RBA: 115 bps (98% probability of rate cut at the upcoming meeting)
• RBNZ: 75 bps (93% probability of rate cut at the upcoming meeting)
• SNB: 18 bps (54% probability of rate cut at the upcoming meeting)

Rate hikes by year-end

• BoJ: 13 bps (98% probability of no change at the upcoming meeting)

As Trump announced the pause in tariffs and a 10% baseline rate for all countries except China, traders rushed to revise their interest rates expectations. The stock market had its best day since 2008. We’ve set lots of records in just a week.

Here you can see yesterday’s update and as you can notice, we’ve gone from the markets expecting roughly five cuts for the Fed to just three now.

This article was written by Giuseppe Dellamotta at www.forexlive.com.