Traders are now putting their money on a 100% chance that the Federal Reserve will cut interest rates by September, with odds pointing to a quarter percentage point decrease in the federal funds rate. The catalyst for this shift was the recent consumer price index update showing a decrease in June, pushing the annual inflation rate to its lowest in three years. Fed Chair Jerome Powell's statements further solidified traders' confidence in a rate cut by September, emphasizing the importance of data supporting the return to the 2% inflation target. The CME FedWatch Tool calculates these probabilities based on futures trading, reflecting where traders are placing their bets. With Powell's assurance that the Fed will act before inflation reaches its target rate, the stage is set for a potential cut in July and again in September. The Fed's next decisions on interest rates are scheduled for July 31 and Sept 18, with traders clearly anticipating a shift in policy.