CME predicts Fed interest rate policy for next two meetings

Summary

As of May 11, 2026, CME FedWatch data indicates a 93.8% probability that the Federal Reserve will maintain interest rates at 3.50%-3.75% in June, with an 88.8% chance of holding steady through July [Zhitong][Fidelity]. This hawkish shift is driven by rising inflation and geopolitical tensions in the Middle East impacting energy costs [][].

Impact Analysis

So the market is basically throwing in the towel on a summer pivot. With a 93.8% chance of a hold in June and nearly 89% for July [Zhitong], we’re seeing the ‘higher for longer’ narrative reach a fever pitch. It’s a classic reaction to the ‘double whammy’ of sticky inflation and those energy price spikes stemming from the Iran conflict [][].

What’s interesting here isn’t just the Fed—it’s the CME itself. They are reporting record trading volumes because institutions are scrambling to hedge this persistent uncertainty [Market Beat]. While the market is pricing out near-term cuts, this volatility is a revenue goldmine for the exchange [Simplywall].

Bottom line: The ‘cut window’ is effectively slammed shut for the next two meetings. I’d be wary of duration plays in fixed income right now. Instead, look at CME as a natural hedge; they’re the house that wins as long as the market remains this divided over the rate path. If inflation doesn’t cool rapidly, expect those hold probabilities to consolidate toward 100%.