Traders are now certain that the Federal Reserve will cut interest rates by September.

According to the CME FedWatch tool, there is a 93.3% chance that the Fed will lower its target range for the federal funds rate by a quarter percentage point to 5% to 5.25% in September, down from the current 5.25% to 5.50%.

Additionally, there is a 6.7% chance of a half percentage point reduction, reflecting some traders’ expectations of rate cuts at both the end of July and in September, CNBC has reported.

This shift in expectations followed the consumer price index update for June, which showed a 0.1% decrease from the previous month, bringing the annual inflation rate to 3%, the lowest in three years.

A month ago, the odds of a September rate cut were around 70%.

Written by B.C. Begley