Futures on the federal funds rate priced in roughly 60 basis points (bps) of easing this year, or about two rate reductions of 25 bps per cut, in line with what the Federal Reserve projected in its rate forecasts released Wednesday.

For the last few weeks, the fed funds futures market has been pricing in two cuts in the federal funds rate, which measures the cost of unsecured overnight loans between banks.

Futures also implied traders see a more than 60% chance that the Fed will resume cutting rates at the June meeting and a more than 70% probability that the move will happen in July, according to LSEG calculations.

The Fed held interest rates steady on Wednesday, as widely expected, but predicted that economic growth could slow to 1.7%, down from its original estimate of 2.1%, with slightly higher unemployment by the end of this year.

Fed policymakers also flagged that they are likely to deliver two 25-bps rate cuts later this year, the same forecast as three months ago. However, there were varying opinions on the appropriate path for interest rates, reflecting uncertainty on how President Donald Trump's trade policies will impact inflation and the overall economy.

Nine of the 19 Fed policymakers expect interest rates in the 3.75%-4.00% range by the end of this year, according to the Fed's quarterly summary of economic projections. Four policymakers felt one rate cut would be appropriate this year, and four indicated the Fed should not cut rates at all.

In the meantime, two policymakers believed that three rate reductions would be the right call.

By the end of 2026, the policy rate will be another 50 bps lower, at 3.4%, according to the Fed projections, which analysts and investors use as a guide for what Fed policymakers think they might actually do.

"For 2025, the interest rate market currently expects the Fed will cut rates to around 3.75% by year-end," said Matthias Scheiber, head of the multi-asset solutions team, at Allspring Global Investments in London.

"A lot will depend on how the inflation-versus-growth trade-off develops—growth may continue weakening, and the Fed may need to cut rates more forcefully than expected."