How Fed Watch works
Fed Watch Methodology
This tool replicates the CME FedWatch methodology using live 30-Day Federal Funds futures (/ZQ) streamed from CME Globex. Each futures contract settles at 100 minus the average daily EFFR across all calendar days in its delivery month.
For a month that contains an FOMC meeting, the month's implied average is a blend of two rates: the rate before the meeting and the rate after. Day-weighting separates them:
where N = days before/on meeting day, D = total days in month.
The implied change in basis points (post − pre) is then linearly interpolated across 25 bp buckets to produce the probability distribution shown in the table.
Effective Federal Funds Rate
The Effective Federal Funds Rate (EFFR) is the actual volume-weighted median rate at which U.S. depository institutions lend overnight reserve balances to one another. It is published each business day by the Federal Reserve Bank of New York.
The Fed does not set the EFFR directly — it sets a target range (e.g., 3.50%–3.75%) and uses open-market operations and the Interest on Reserve Balances (IORB) rate to keep the EFFR inside that range.
In practice, the EFFR trades roughly 8–12 bp below the target upper bound — but the exact spread drifts, so this tool uses the published rate rather than an assumed offset. In the few days after an FOMC decision, before the published series catches up, the rate is instead backed out of the current-month Fed Funds contract by inverting the same day-weighting:
All rate calculations on this page are denominated in the EFFR, not the target range midpoint.
Reading the Probability Table
- Meeting
- The second day of the FOMC meeting, when the rate decision is announced (typically 2:00 PM ET).
- Contract
- The /ZQ futures contract whose settlement month contains the meeting. Hover for a tooltip; see below for symbol decoding.
- Implied Avg EFFR
- The average EFFR implied by the contract price for that entire calendar month (
100 − price). - Pre-Meeting Rate
- The EFFR expected going into the meeting, chained forward from the current EFFR using earlier meetings.
- Post-Meeting Rate
- The EFFR the futures market implies after the decision — backed out via day-weighting.
- Change
- Post minus pre, in basis points. Green = cut priced in; red = hike; gray = effectively flat.
- Probabilities
- Stacked bar showing the market-implied probability for each outcome bucket. Hover for labeled values.
30-Day Federal Funds Futures
/ZQ is the CME Globex ticker for 30-Day Federal
Funds futures. Each contract covers one calendar month and
cash-settles at 100 − arithmetic mean daily EFFR for
that month.
The letter after /ZQ is the month code, and
the two digits are the year:
| Code | Month | Code | Month | Code | Month |
|---|---|---|---|---|---|
F | January | G | February | H | March |
J | April | K | May | M | June |
N | July | Q | August | U | September |
V | October | X | November | Z | December |
Example: /ZQM26 = June 2026 contract.
It settles at 100 − avg(daily EFFR across all June 2026 business days).
Contract prices are streamed live from CME Globex during trading hours. Outside market hours the strip reflects the prior close.
About the Federal Open Market Committee (FOMC)
What Is the FOMC?
The Federal Open Market Committee is the monetary policy body of the U.S. Federal Reserve. It consists of the 7 members of the Board of Governors plus 5 of the 12 regional Federal Reserve Bank presidents (on a rotating basis, except New York which holds a permanent seat).
The FOMC meets 8 times per year on a pre-announced schedule. Rate decisions are announced at 2:00 PM ET on the second day of each meeting, followed by a press conference with the Fed Chair.
What Is a Basis Point?
A basis point (bp) is one one-hundredth of a percentage point — 0.01%. The Fed typically moves rates in 25 bp increments. A 25 bp cut from 3.75% brings the target to 3.50%.
A 50 bp move (called a "jumbo" cut or hike) signals unusual urgency. Moves larger than 50 bp are historically rare outside emergency conditions.
On this page, >25bp cut/hike means the market is pricing a move larger than one standard increment.
Why Watch Futures?
Fed Funds futures represent real money bets on where overnight rates will land. Because they settle against the actual realized EFFR, large institutional traders — who have the most information — put capital behind their rate views.
The implied probabilities are therefore a market consensus forecast, not a survey or model. They update continuously as new economic data, Fed communications, and geopolitical events shift expectations.
Probabilities are refreshed every 30 seconds during market hours. The /ZQ strip updates every 5 seconds.