Interest Rate Probability:the path the market expects.
Interest rate probability shows what the market expects central banks to do at each of their next meetings. For every meeting you see the chance of a hold, a hike or a cut, and the implied rate path that follows from it.
It is the fastest way to see what is priced in before a central bank decision or a big data release.
What it shows
Per meeting: the probabilities for hold, hike and cut, the implied rate and the base case. Over several meetings, that becomes the implied rate path, the line the market draws for rates over the next months.
How to read it
Watch the changes. When the chance of a cut in December jumps from 45% to 70% after a data release, the market just repriced, and the currency usually moves with it.
Use it in real trading
The tool informs the decision, it never makes it. Here is how it plays out on real trading days.
A cut is priced at 80%. A hold would be the surprise, so that is the outcome that moves the currency most.
Soft jobs data lifts the cut odds for the next 2 meetings. The dollar weakens, and your EURUSD long now has the rate story behind it.
Mistakes to avoid
- Trading the decision without knowing what was priced in.
- Looking only at the next meeting instead of the path.
- Ignoring how data releases shift the odds.
What makes it different
The probabilities sit next to the calendar and the Scenario Desk, so you connect what is priced in with what could change it.
Questions
Which central banks can I follow?
The major central banks. Open the tool to see every meeting that is covered.
What is the implied rate?
The rate the market expects after each meeting, based on current pricing.
Why did the currency fall when the bank cut?
Probably because the cut was fully priced in, and the guidance was softer than expected.