The Federal Reserve Board logo is visible on the William McChesney Martin Jr. Building in Washington, DC, on December 9, 2025.
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On prediction market platform Calsi, the probability that the Federal Reserve will raise interest rates this year jumped from 25.3% to 52% last week.
Those odds come after Friday’s Bureau of Labor Statistics report showed nonfarm payrolls reached 172,000, comfortably beating the Dow Jones forecast of 80,000. The likelihood that the Fed will raise interest rates by July 2027 also rose from 54% to 65% in the past week, according to Calci.
Higher Fed rates mean the Fed will raise interest rates to prevent the economy from overheating. Economists believe a rate hike is on the horizon after better-than-expected jobs data and annual core inflation reached 3.3% in April.
“I actually think it could happen this year, and there’s a reason for that. Inflation is pretty sticky,” former Federal Reserve Vice Chairman Roger Ferguson said on CNBC’s “Squawk Box.”
CME’s FedWatch tool recorded a 50% chance that interest rates will rise this year. For other economists, the move means the Fed will do nothing for now.
“Payroll blowout! We’re growing more confident with the Fed’s latest report that it doesn’t need to worry about the labor market,” Lindsey Rosner, head of multisector fixed income investing at Goldman Sachs Asset Management, said in a note. “The laser is focused on inflation, and it will ultimately be the duration of this war that will determine the Fed’s next action. For now, the action is motionless, or hold.”
Sectors such as leisure and hospitality recorded 70,000 jobs, the most of all sectors. Meanwhile, local government added 55,000 jobs, social assistance added 12,000, and health care added 35,000, roughly in line with the average.
Disclosure: CNBC and Kalsi have a commercial relationship that includes customer acquisition and minority ownership.
