For the first time in more than three years, prediction markets think the Federal Reserve's next move is up. The Fed raised rates by a quarter point on September 16, 2026, and as of September 21 the market prices a second hike at the October 27–28 meeting at 53.5¢ on Polymarket and 55–56¢ on Kalshi. A hold sits at 44–45¢ on both venues. A cut is priced at under 1¢.
Those Fed rate odds mark a sharp turn. Six weeks ago, the question traders asked was how many cuts 2026 would bring. Now the "how many cuts" market prices zero cuts for the year at 96%, and the conversation has moved to how far Chairman Kevin Warsh's Fed will go to contain inflation that, as CNN reported, has climbed since early in the year with the war with Iran pushing oil higher.
Below is the October market, the year-end market, how the September decision played out in prediction markets, what the Fed's own projections say against the market's view, and how these contracts settle.
| October 28 decision | Polymarket | Kalshi (bid / ask) | Implied probability |
|---|---|---|---|
| 25 bp hike | 53.5¢ | 55¢ / 56¢ | About 54–56% |
| No change | 44.5¢ | 44¢ / 45¢ | About 44–45% |
| 50 bp or larger hike | 0.9¢ | 0¢ / 2¢ | About 1% |
| 25 bp cut | 0.5¢ | 0¢ / 1¢ | Under 1% |
| 50 bp or larger cut | 0.4¢ | 0¢ / 1¢ | Under 1% |
Prices come from PredictReport's tracker on the morning of September 21, 2026; the live Fed decision page refreshes every ten minutes. Each contract pays $1 if the Fed makes that move at the October meeting. If the jump from cents to probabilities is new, our explainer on prediction market odds covers it, and how prediction markets work explains the mechanics.
The September Hike That Reset the Market
On September 16, the Federal Open Market Committee voted 12–0 to raise the federal funds target range by 25 basis points to 3.75%–4.00%. It was the first increase since July 2023. The committee's statement said that "inflation remains elevated" and that the hike "will support a timelier return to the Committee's 2 percent goal."
Warsh, presiding over his first hike as chairman, framed it as a defensive move. He said the Fed cannot single-handedly stop price shocks in goods like oil, but will act to ensure changes in relative prices do not broaden into wider inflation. A resilient labour market gave the committee room to focus on prices rather than jobs.
For anyone who traded the September meeting, the path to that decision was not smooth. PredictReport's tracker shows the September hike priced at 57.5¢ on September 2, then falling to 37.5¢ a day later as a hold briefly became the favourite at 62.5¢. By the meeting, the market had swung back, and the hike contract settled at $1. Two weeks of 20-point swings on a Fed decision is a reminder that these markets move on every data release and every official's speech.
The hike also reversed a year of easing. The Fed cut three times in late 2025, in September, October and December, bringing the target range down to 3.50%–3.75% after the hiking cycle of 2022–2023 had taken it as high as 5.25%–5.50%. September's move puts the range back where it stood between the October and December 2025 cuts. Our economics markets tracker follows every Fed contract we price on both venues.
Prediction markets are not the only place to read Fed expectations. The traditional benchmark is the probability derived from fed funds futures, published as CME's FedWatch tool, and professional desks watch both. The two usually track each other closely, because the same traders arbitrage between them. Where prediction markets add something is access: a retail trader can take a view on a single meeting with a few dollars, and can see the result expressed directly as a probability. Our guide to prediction market accuracy covers how well these prices have forecast events like this.
October Odds: A Near Coin Flip on Another Hike
The October market is priced about as close to even as a Fed market gets. A hike at 53.5–56¢ against a hold at 44–45¢ means traders see the committee as genuinely undecided about moving at back-to-back meetings.
There are reasons to expect either. The case for October is momentum: having started a hiking cycle, the Fed often moves at consecutive meetings to establish credibility. The case for waiting is that October's meeting carries no new economic projections, while December's does, and a committee that has just moved for the first time in three years may prefer to see a few weeks of data before moving again.
What the prices mean in money: buying the hike at 56¢ on Kalshi returns 44¢ per contract if the Fed moves, a 79% gain in five weeks; buying the hold at 45¢ returns 55¢, a 122% gain, if it does not. Both are large payoffs because the market is close to 50–50. The key inputs between now and October 28 are the September inflation report and the September jobs report, both released in October. Our guide to trading economic data markets on Kalshi covers how to trade those releases directly.
What the Fed's Own Projections Say
The Fed's September projections are more hawkish than the October market. According to the forecasts submitted at the September meeting, 16 of the 18 participants expect at least one more hike at the final two meetings of 2026, and four of those see two more.
That creates an interesting gap. If nearly all officials expect another hike before year-end, but the market prices October at only about 55%, the market is implicitly placing much of the next move in December. That is a coherent view: December brings fresh projections, and it gives the committee two more months of inflation data. It is also a view that could be wrong in either direction if October's inflation data surprises.
Projections are not commitments, and the Fed's dots have a mixed record as forecasts. But when officials signal this clearly, markets usually follow within a meeting or two. For traders, the practical point is that a hold in October does not mean the hiking cycle is over, and prices on the December meeting will reflect that. Our expected value guide explains how to turn your own view into a price you are willing to pay.
How Many Cuts in 2026: The Market Says None
The second major Fed market asks how many rate cuts the Fed will make across all of 2026. The answer the market gives is none, at 96¢ on Polymarket and 95.3–95.9¢ on Kalshi.
| Cuts in 2026 | Polymarket | Kalshi (bid / ask) |
|---|---|---|
| 0 | 96.0¢ | 95.3¢ / 95.9¢ |
| 1 (25 bp) | 1.2¢ | 3.1¢ / 3.5¢ |
| 2 (50 bp) | 0.5¢ | 0.1¢ / 0.5¢ |
| 3 (75 bp) | 0.4¢ | 0.1¢ / 0.4¢ |
This market has moved sharply this month. On September 2, zero cuts traded at 88.9¢ and one cut at 8.5¢. After the hike, one cut collapsed to 1.2¢. With only two meetings left and the Fed hiking, a cut in 2026 would require a sudden deterioration serious enough to reverse the committee within weeks. The market puts that at roughly 4%.
The live cuts market shows the current board. It has traded about $53 million on Polymarket, far more than the October decision market, because it has been open all year.
How the Fed Odds Moved in September
A caution before reading any chart of Fed odds: meeting-specific markets roll over. PredictReport's tracker followed the September meeting until it settled on September 16, then switched to the October meeting. Comparing a September price with an October price is comparing two different questions.
| Market | Early September | September 21 | What happened |
|---|---|---|---|
| September meeting: hike | 57.5¢ (Sept 2), 37.5¢ (Sept 3) | Settled at $1 | Fed hiked 25 bp |
| September meeting: hold | 40.5¢ (Sept 2), 62.5¢ (Sept 3) | Settled at $0 | — |
| October meeting: hike | — | 53.5¢ | Open |
| 2026 cuts: zero | 88.9¢ (Sept 2) | 96.0¢ | Rose after hike |
| 2026 cuts: one | 8.5¢ (Sept 2) | 1.2¢ | Collapsed after hike |
Polymarket prices shown. The year-end market is the cleaner series to follow, because it is a single contract that has been open throughout. Our explainer on how prediction markets resolve covers how meeting contracts are defined and settled.
Polymarket vs Kalshi on Fed Decisions
The two venues agree closely on the October meeting: within two points on the hike and level on the hold. Polymarket's October market has traded about $8.4 million and Kalshi's about 2 million contracts. Kalshi lists a wider range of Fed contracts, including markets on the exact target range, which our Kalshi review covers.
The one gap worth noting is on a single cut in 2026: 1.2¢ on Polymarket against 3.1–3.5¢ on Kalshi. Our arbitrage scanner flags it as a small opportunity — buy one cut on Polymarket at its 1.4¢ ask and against it on Kalshi at 96.9¢, for a combined cost of about 98.3¢ before fees. After fees the return is about 0.7%, which annualises to roughly 2.5% because the market settles at the end of December.
That annualised figure is the useful part. Kalshi pays roughly 4% a year on idle cash, so this arbitrage currently earns less than leaving the money uninvested on Kalshi. Locked profits are only worth taking when they beat the yield on cash, a comparison our arbitrage guide walks through. For a broader head-to-head of the two venues, see Polymarket vs Kalshi.
How Fed Rate Markets Resolve
Fed decision contracts settle on the target range announced in the FOMC statement, released at 2:00 p.m. Eastern time on the final day of the meeting. For October, that is Wednesday, October 28. Settlement is fast and clean in normal circumstances, because the statement leaves no room for interpretation.
The edge cases are worth knowing. An unscheduled meeting — the Fed has cut between meetings in emergencies, most recently in March 2020 — may or may not count toward a given contract, depending on the rules. Contracts on the number of cuts in a year count every change across the calendar year, including any between meetings. Read each venue's rules on these points, especially if you hold positions on both. Our guide to resolution lists what to check.
Using Fed Odds to Hedge Real-World Rate Exposure
Fed markets are one of the few prediction markets with a direct use beyond speculation. Anyone whose finances depend on interest rates can use them to offset part of that exposure.
A borrower with a variable-rate loan, for example, loses if rates rise. Buying the October hike contract pays out in exactly the scenario that makes the loan more expensive. A $10,000 variable-rate balance costs about $25 more a year for every 25 basis points, so a hedge sized to cover that does not need to be large. Savers face the opposite exposure: higher rates help them, so a hold contract offsets the scenario in which rates stay lower than expected. Our guide to hedging with prediction markets works through how to size these positions.
For the inputs behind these markets — the Atlanta and Cleveland Fed nowcasts, CME's FedWatch probabilities and the official release calendar — our roundup of free prediction market tools lists where to find each one. Watching them alongside the market prices is the simplest way to see when the two start to disagree.
How to Trade Fed Rate Odds
Kalshi is the natural venue for most US traders: CFTC-regulated, dollar-settled, with a wide menu of rate contracts and roughly 4% paid on idle cash. Polymarket offers the same headline markets and settles in USDC; our Polymarket review covers it. For the wider field, see our ranking of the best prediction market apps.
Three rules help. Trade before the data, not after it: prices move within seconds of the inflation and jobs releases, and chasing the move usually means paying the spread at the worst time. Use limit orders, which our guide to limit orders explains. And remember the fee: Kalshi's is 0.07 × contracts × price × (1 − price), which peaks near 50¢ — exactly where the October contracts trade — at about 1.75¢ per contract. Our market fee calculator runs the numbers for any size.
Fed contracts are economic event contracts rather than sports or elections, and they sit on firmer legal ground in most states; our legal guide explains the distinctions. Profits are taxable when realised, and Kalshi issues a 1099-MISC — see our prediction market tax guide.
Frequently Asked Questions
Will the Fed raise rates in October 2026?
Prediction markets price it as slightly more likely than not. As of September 21, 2026, a 25 bp hike at the October 27–28 meeting trades at 53.5¢ on Polymarket and 55–56¢ on Kalshi, with a hold at about 44–45¢.
What did the Fed do at its September 2026 meeting?
It raised the federal funds target range by 25 basis points to 3.75%–4.00% on September 16, in a 12–0 vote. It was the first hike since July 2023.
Will the Fed cut rates in 2026?
Markets say almost certainly not. Zero cuts for 2026 trades at 96¢ on Polymarket and about 95.5¢ on Kalshi, up from 88.9¢ at the start of September.
What do Fed officials expect for the rest of 2026?
In their September projections, 16 of 18 participants expected at least one more hike at the final two meetings of 2026, and four expected two more. The market prices October at about 55%, which implies it expects much of that tightening in December.
When is the next Fed meeting?
October 27–28, 2026, with the decision announced at 2:00 p.m. Eastern time on October 28. The following meeting, in December, includes updated economic projections.
How do Fed prediction market contracts settle?
On the target range announced in the FOMC statement. Contracts on the number of cuts count every change during the calendar year. See our guide to how prediction markets resolve.
Is there an arbitrage on Fed rate markets?
A small one, on a single cut in 2026: about 0.7% after fees, or roughly 2.5% annualised. That is below the roughly 4% Kalshi pays on idle cash. Our arbitrage scanner tracks it live.
Can I use Fed prediction markets to hedge my mortgage?
You can offset part of your exposure to rising rates by holding hike contracts, sized to the extra interest you would pay. Our guide to hedging with prediction markets explains how to size a hedge.
