Traders see good chances that the Fed will cut again in December and skip in January

Expectations for a rate cut in December remained strong after the Federal Reserve trimmed interest rates by a quarter of a percentage point in November, but market prices suggest the likelihood of a “jump” in January.

On Thursday afternoon, the US central bank cut the federal funds rate, which determines what banks charge each other for overnight lending, to a target range of 4.5% to 4.75%.

Before the Fed announced this decision at 2 p.m. ET, market prices pointed toward a 67% chance of another quarter-point cut in December and a 33% chance of a pause that month, according to CME FedWatch Tool.

The probability of a rate cut in December rose to more than 70% after the meeting, while the odds of a pause fell to almost 29%. Future interest rate probabilities found in the CME FedWatch Tool are derived from trading 30-day fed funds futures contracts.

Meanwhile, the odds that the Federal Reserve would skip a rate cut in January were around 71%. This was slightly higher from 67% before the announcement of the Fed’s November decision on Thursday afternoon.

— CNBC’s Jeff Cox contributed to this report.