Will the Fed Cut Rates? 94% Say Yes with $35 Million on the Line
Prediction markets present a 94% likelihood the Federal Reserve will reduce rates of interest on Wednesday. In the previous 24 hours alone, $14 million has traded on the December determination throughout the two main prediction markets, with $310 million in all-time quantity.
Polymarket reveals 94% odds of a 25-basis-point discount, with $28.2 million in open curiosity. Kalshi odds have the reduce at 93%, with $7.2 million in open curiosity. Open curiosity displays the $35 million at the moment at stake throughout each markets; quantity counts each purchase and promote, together with merchants who’ve since exited their positions.
24-hour and open curiosity figures per DeFi Rate tracker. All-time quantity from Polymarket and Kalshi API.
For comparability, Polymarket’s October Fed determination market closed at $252.5 million in complete quantity—making December’s $287.1 million about 14% increased.
Markets weren’t at all times this assured
The present consensus masks sharp swings. When October’s FOMC minutes dropped on November 19, Polymarket’s “no change” consequence spiked above 60%. The minutes confirmed “strongly differing views” amongst committee members, with Powell having referred to as a reduce “not a foregone conclusion.”
Two Fed officers reversed the transfer. New York Fed President John Williams mentioned in a November 21 speech in Santiago, Chile that he sees “room for an extra adjustment in the close to time period.” Governor Christopher Waller additionally backed continued easing. Within 48 hours, the odds surged from roughly 40% to above 70%.
Even so, Bank of America economists expect at the very least two dissenting votes Wednesday. In October, Governor Stephen Miran voted for a bigger 50 foundation level reduce whereas Kansas City Fed President Jeffrey Schmid most well-liked no reduce in any respect.
What to look at this week
The Federal Open Market Committee meets Tuesday and Wednesday. Chair Jerome Powell will announce the determination Wednesday at 2:00 p.m. ET, alongside up to date financial projections.
A reduce would deliver the federal funds fee goal vary from 3.75-4.00% to 3.50-3.75%, marking the Fed’s third consecutive quarter-point discount following cuts in September and October. The central financial institution held charges regular by way of the first 5 conferences of 2025 earlier than starting to ease in September.
The December assembly contains an up to date Summary of Economic Projections and the intently watched “dot plot,” which reveals the place every FOMC participant expects charges over the coming years.
Markets are already suggesting a pause may comply with. Polymarket reveals 68% odds the Fed holds charges regular at its January 28 assembly. Kalshi reveals a January maintain at 65%.
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