ChainCatcher reports that investors are betting on a significant interest rate cut by the Federal Reserve this week, but they are likely to be disappointed as the US economy simply doesn't warrant such an aggressive move.

According to the CME FedWatch Tool, US interest rate futures currently imply a 65% chance of a 50 basis point cut and a total of 116 basis points in cuts this year. However, a series of economic data released on Tuesday prompted the Atlanta Fed to raise its third-quarter GDP growth forecast from 2.6% to 3.0%, suggesting that the economy is not in as bad a shape as some believe. Weighing all factors, the Fed is likely to cut rates by 25 basis points, with Powell reiterating a data-dependent approach. The Fed's dot plot is unlikely to confirm the current pricing for aggressive and rapid rate cuts, but rather show a more moderate pace of cuts. This could be interpreted as a "hawkish cut," forcing those who have rushed to bet on a significant rate cut to cover their positions. (Jin Shi)