Fed Rate Hike Odds Plunge to 4% After Record PPI Drop
The probability of a Federal Reserve rate hike in July has fallen to a new low of 4% following the largest monthly decline in US Producer Price Index (PPI) since April 2025. Both headline and core PPI were also revised lower for May.
According to market data, the implied probability of a Fed rate hike at the July meeting has collapsed to just 4%, a new low. The trigger was the release of US Producer Price Index (PPI) figures, which recorded their biggest monthly drop since April 2025.
Both headline and core PPI inflation were revised downward for the month of May, reinforcing a trend of cooling inflation expectations. The data adds to the case for the Fed to pause or end its tightening cycle.
Source: The Kobeissi Letter