CME Group FedWatch tool sees virtually no chance of September hike

The probability of a 25 bps rate hike in September following today's FOMC statement fell to 3% from 7.7%, according to the CME Group FedWatch Tool, which calculates unconditional probabilities of Federal Open Market Committee (FOMC) meeting outcomes to generate a binary probability tree.

On the other hand, odds of a December rate hike increased to 46.8% from 43.1% on Tuesday, suggesting that a lower chance of a September rate hike leaves December as the next best option for the Fed to make its last rate hike of the year.

Today's statement from the FOMC was nearly identical to the June statement with a few changes to the phrases used to explain the balance sheet normalization program. The Committee said the shrinkage would start "relatively soon" instead of "this year."

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