Traders are now completely sure that the Federal Reserve will lower interest rates by September.

According to the CME FedWatch tool, there is a 93.3% chance that the Fed’s target range for the federal funds rate, which is its main interest rate, will drop by a quarter percentage point to 5% to 5.25% in September. Currently, it is at 5.25% to 5.50%. There is also a 6.7% chance that the rate will be half a percentage point lower in September. This means some traders think the central bank will cut rates at the end of July and then again in September. When you add these probabilities together, it makes 100%.

The main reason for this change is the consumer price index update for June, announced last week. It showed a 0.1% decrease from the previous month, putting the annual inflation rate at 3%, the lowest in three years. A month ago, the chance of a rate cut in September was about 70%.

The CME FedWatch Tool calculates these probabilities based on trading in fed funds futures contracts. This means traders are betting on what the fed funds rate will be in 30-day increments. So, it shows where traders are putting their money. While the real chance of rates staying the same in September isn’t zero, it means no traders are betting money on that outcome.

Fed Chairman Jerome Powell’s recent comments have also convinced traders that the central bank will act by September. On Monday, Powell said the Fed wouldn’t wait for inflation to drop to its 2% target before cutting rates because tightening takes time to show its full effects.

The Fed wants to be “more confident” that inflation will return to the 2% level, Powell said.

“What increases that confidence is more good inflation data, and lately we have been getting some of that,” Powell added.

The Fed’s next meetings to decide on interest rates are on July 31 and September 18. They do not have a meeting in August.