The Federal Reserve's interest rate decisions drive global financial markets. In recent years, the Fed has raised rates aggressively to combat inflation. By late 2025 and into 2026, the question becomes whether the Fed will pivot to cutting rates. Five cuts in a single calendar year would represent a significant shift in monetary policy—currently trading at just 1% probability, suggesting the market sees this as highly unlikely. The current 1% odds imply that traders believe the Fed will either hold rates steady or make fewer than five cuts throughout 2026. This makes sense given recent Fed communication suggesting a gradual, measured approach to rate cuts. Each FOMC meeting (typically held eight times per year) presents an opportunity for a rate cut, so five cuts would require rate cuts at roughly every other meeting. The market's low probability reflects expectations of a slower normalization process. If economic data shifts dramatically—such as a significant slowdown in growth or decline in inflation—market odds could move meaningfully higher. Conversely, persistent inflation or a hot labor market could keep the odds depressed throughout 2026.